Nifty skids lower for second consecutive day; ends tad below 8100 level

After witnessing consolidation in previous session, Nifty drifted southward on Wednesday and ended the day’s trade with a cut of over fifty-eight points. The sentiment has weakened on concerns that foreign funds may start trimming their exposure to emerging markets like India if the US Federal Reserve hikes interest rates sooner-than-expected. Besides, weak rupee and caution ahead of the release of macro-economic data also weighed on market sentiment. Heavy selling pressure was seen in consumer durables, oil and gas and capital goods, fast moving consumer goods (FMCG) and information technology (IT) sectors, while mild buying was observed in power and realty sectors. After negative start, nifty showed extremely range-bound session in first half but witnessed a sharp selling in second half of session as weak opening in European counterparts extended nervousness in the market. However, mild recovery in last half an hour helped nifty to conclude the session tad below its crucial 8,100 mark.

After today profit booking, some investors believe that this might be a start of new correction, while some traders are expecting more run up on the back of sustained recovery in the economy. Meanwhile, the trade is likely to remain volatile this week, as the government will issue figures on growth in index of industrial production (IIP) and consumer price index (CPI)-based inflation for July and August, respectively, on September 12, 2014.

The top gainers from the F&O segment were Zee Entertainment Enterprises, MRF and Indian Overseas Bank. The top losers were LIC Housing Finance, Titan Company and SKS Microfinance. In the index options segment, maximum OI continues to be seen in the 8300-8200 calls and 8000-7900 puts indicating the expected trading range. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session, which shows that traders are buying more options contracts as insurance against declines in the market.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.35% and reached 12.93. The 50-share CNX Nifty decreased by 58.85 points or 0.72% to settle at 8,094.10. Nifty September 2014 futures closed at 8130.70 on Wednesday at a premium of 36.60 points over spot closing of 8,094.10, while Nifty October 2014 futures ended at 8175.35 at a premium of 81.25 points over spot closing. Nifty September futures saw contraction of 0.69 million (mn) units, taking the total outstanding open interest (OI) to 14.48 mn units. The near month derivatives contract will expire on September 25, 2014.

From the most active contracts, IDFC September 2014 futures traded at a contraction of 0.10 points at 145.50 compared with spot closing of 145.60. The number of contracts traded were 18,308.

Reliance Industries September 2014 futures traded at a premium of 5.15 points at 1021.85 compared with spot closing of 1,016.70. The number of contracts traded were 18,772.

Tata Motors September 2014 futures traded at a premium of 3.20 points at 518.70 compared with spot closing of 515.50. The number of contracts traded were 10,091.

Tata Steel September 2014 futures traded at a premium of 2.05 points at 522.05 compared with spot closing of 520.00. The number of contracts traded were 12,729.

Apollo Tyre September 2014 futures traded at a premium of 1.40 points at 210.65 compared with spot closing of 209.25. The number of contracts traded were 14,927.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with an addition of 0.28 million open interests. Among Nifty puts, 8,100 SP from the September month expiry was the most active put with a contraction of 0.67 million open interests. The maximum OI outstanding for Calls was at 8300 SP (6.03 mn) and that for Puts was at 8,000 SP (8.35 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8125.87 --- Pivot Point 8103.98 --- Support --- 8072.22.

The Nifty Put Call Ratio (PCR) finally stood at 1.18 for September month contract. The top five scrips with highest PCR on OI were Sun TV (1.28), Kotak Bank (1.15), Bata India (1.14), Indiabulls Real Estate (1.02) and YES Bank (1). 

Among most active underlying, IRB Infrastructure Developers witnessed an addition of 1.26 million of Open Interest in the September month futures contract, followed by State Bank of India witnessing a contraction of 0.04 million of Open Interest in the September month contract; while ICICI Bank witnessed a contraction of 0.11 million of Open Interest in the September month futures contract, Apollo Tyres witnessed an addition 1.04 million of Open Interest in the September month contract and Reliance Industries witnessed an addition of 0.88 million of Open Interest in the September month's future contract