Nifty prolongs consolidation for second straight session

The fifty stock index -- Nifty -- continued its consolidation for second consecutive day on Friday and finished the range bound session of trade with a cut of over one-tenths of a percent as profit-taking continued in blue-chips such as ICICI Bank after a string of records earlier this week, while foreign investor selling in equity derivatives also weighed the sentiment. Overseas investors sold index futures worth Rs 5.91 billion ($97.9 million) and stock futures worth Rs 6.77 billion on September 04, 2014. Besides, Investors were also cautious ahead of the Supreme Court’s verdict in the coal-block allocation case, due on September 9, 2014. The apex court had ruled on August 25, 2014 that all coal block allocations between 1993 and 2010 are illegal. However, losses were capped on report that heavy showers across north and northwest-India narrowed the overall monsoon deficit in the country to 14% and have accelerated crop growth. Some support also came on report that the government may allow EPFO to invest in the stock markets, potentially making this the biggest source of domestic institutional investment after LIC. Traders were seen piling up positions in Realty, Capital Goods and Metal while selling was witnessed in Auto, FMCG and Bankex sector stocks.

After getting a cautious but positive start, nifty showed some strengthen in early morning trade and held their head above 8100 mark, but the sentiments turned pessimistic in afternoon trade and nifty slipped into the red zone. Nifty recovered several times but failed to sustain in the green and ended the session with a marginal cut of over one tenths of a percent. Traders were seen piling up positions in Realty, Capital Goods and IT while selling was witnessed in Auto, Power and Infra sector stocks.

The market is likely to remain buoyant on the back of good foreign institutional investor (FII) flows and net buying from domestic mutual funds. Besides, there have some positive signs on the macro front too like oil prices remaining subdued and government making right noises, which would keep up the buoyancy. In the index options segment, maximum OI continues to be seen in the 8200-8300 calls and 8000-7900 puts indicating the expected trading range.

The top gainers from the F&O segment were Hexaware, Voltas and NMDC. The top losers were Jaiprakash Associates, IFCI and United Spirits. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined for fourth consecutive day, which indicates that traders have slowed down buying options contracts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.09% and reached 12.93. The 50-share CNX Nifty decreased by 9.10 points or 0.11% to settle at 8,086.85. Nifty September 2014 futures closed at 8116.70 on Friday at a premium of 29.85 points over spot closing of 8,086.85, while Nifty October 2014 futures ended at 8157.65 at a premium of 70.80 points over spot closing. Nifty September futures saw contraction of 0.57 million (mn) units, taking the total outstanding open interest (OI) to 15.33 mn units. The near month derivatives contract will expire on September 25, 2014.

From the most active contracts, Jaiprakash Associates September 2014 futures traded at a premium of 0.40 points at 33.90 compared with spot closing of 33.50. The number of contracts traded were 13,457.

DLF September 2014 futures traded at a premium of 0.75 points at 175.75 compared with spot closing of 175.00. The number of contracts traded were 20,135.

Reliance Industries September 2014 futures traded at a premium of 7.85 points at 1030.70 compared with spot closing of 1022.85. The number of contracts traded were 25,063.

Tata Steel September 2014 futures traded at a premium of 1.70 points at 515.70 compared with spot closing of 514.00. The number of contracts traded were 16,403.

Crompton Greaves September 2014 futures traded at a premium of 0.95 points at 219.15 compared with spot closing of 218.20. The number of contracts traded were 17,278.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with an addition of 0.43 million open interests. Among Nifty puts, 8,000 SP from the September month expiry was the most active put with an addition of 0.04 million open interests. The maximum OI outstanding for Calls was at 8200 SP (5.72 mn) and that for Puts was at 8,000 SP (7.04 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8123.08 --- Pivot Point 8086.47 --- Support --- 8050.23.

The Nifty Put Call Ratio (PCR) finally stood at 1.15 for September month contract. The top five scrips with highest PCR on OI were Apollo Hospital (1.78), Sun TV (1.57), Jubilant Foodworks (1.26), Indiabulls Real Estate (1.06) and Kotak Bank (1.05). 

Among most active underlying, State Bank of India witnessed a contraction of 0.27 million of Open Interest in the September month futures contract, followed by IRB Infrastructure Developers witnessing an addition of 1.11 million of Open Interest in the September month contract; while DLF witnessed a contraction of 4.07 million of Open Interest in the September month futures contract, Arvind witnessed an addition 0.76 million of Open Interest in the September month contract and Tata Steel witnessed a contraction of 0.57 million of Open Interest in the September month's future contract