Bears run berserk throughout the session; Nifty ends below 8050 level

Bears hammered bulls throughout the session giving the Nifty no chance to bounce back. Besides, the profit booking was so intense that the index plunged well below its crucial 8,050 mark. The sentiments were subdued from early morning trades, which deteriorated further on disappointment over European manufacturing data and concerns about an unemployment measure in a survey in China. The trading sentiments were also hit as International credit rating agency Moody's on its report estimated that state run banks in India will need to raise funds in the range of $26-$37 billion over the next 4-5 years to meet Basel III compliance norms, which is required to be fully implemented by 2019. Besides, the Supreme Court verdict in the coal block allocation case, likely this week, is also keeping the markets on edge. The apex court ruled on 25 August that all coal block allocation since 1993 are illegal. Meanwhile, Oil and gas stocks witnessed selling pressure on uncertainty over gas pricing issue. Furthermore, shares of real estate stocks were under pressure as property prices in Delhi are set to rise. The Delhi government hiked circle rates by up to 20 percent with an aim to check black money component in sale and purchase transactions.

After negative start, nifty showed extremely range-bound session in first half and a sharp selling in second half of session as weak opening in European counterparts extended nervousness in the market. Finally, Nifty ended the session below its crucial 8,050 mark with a cut of over one and a half percent.

After today’s sell off, nifty might take a break and show some gains on the back of short covering by traders as well as participants will utilized all major dips as an opportunity to buy and accumulate good quality stocks. Besides, the market is likely to remain volatile during the week as traders roll over positions in the futures & options (F&O) segment from the near month September 2014 series to October 2014 series. In today's session, some traders exited from 8200, 8100 and 8000 Puts on the back of profit booking. On the other hand, 8100 and 8200 Calls saw addition of 16.45 and 5.70 lakh shares, respectively.

The top gainers from the F&O Securities were L&T Finance Holdings, HCL Technologies and MindTree. The top losers were Unitech, India Cements and DLF. Snapping two consecutive sessions’ losing streak, India VIX - the gauge of underlying volatility in the market - has risen in today's session as traders turned cautious ahead of the expiry of derivatives contract on September 25, 2014.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 7.31% and reached 12.41. The 50-share CNX Nifty decreased by 128.75 points or 1.58% to settle at 8,017.55. Nifty September 2014 futures closed at 8032.20 on Tuesday at a premium of 14.65 points over spot closing of 8,017.55, while Nifty October 2014 futures ended at 8082.25 at a premium of 64.70 points over spot closing. Nifty September futures saw contraction of 0.97 million (mn) units, taking the total outstanding open interest (OI) to 10.11 mn units. The near month derivatives contract will expire on September 25, 2014.

From the most active contracts, DLF September 2014 futures traded at a premium of 0.45 points at 155.90 compared with spot closing of 155.45. The number of contracts traded were 18,372.

HDFC Bank September 2014 futures traded at a premium of 1.25 points at 850.50 compared with spot closing of 849.25. The number of contracts traded were 26,120.

Reliance Industries September 2014 futures traded at a premium of 5.70 points at 969.55 compared with spot closing of 963.85. The number of contracts traded were 42,610.

Tata Motors September 2014 futures traded at a premium of 0.25 points at 519.00 compared with spot closing of 518.75. The number of contracts traded were 21,930.

ICICI Bank September 2014 futures traded at a premium of 3.95 points at 1541.85 compared with spot closing of 1537.90. The number of contracts traded were 31,252.

Among Nifty calls, 8100 SP from the September month expiry was the most active call with an addition of 1.64 million open interests. Among Nifty puts, 8,100 SP from the September month expiry was the most active put with a contraction of 3.20 million open interests. The maximum OI outstanding for Calls was at 8200 SP (8.25 mn) and that for Puts was at 8,000 SP (6.78 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8115.50 --- Pivot Point 8061.80 --- Support --- 7963.85.

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for September month contract. The top five scrips with highest PCR on OI were OFSS (3.54), Dr. Reddy's Laboratories (1.62), Kotak Bank (1.59), Maruti Suzuki (1.58) and Hero MotoCorp (1.27). 

Among most active underlying, State Bank of India witnessed a contraction of 0.47 million of Open Interest in the September month futures contract, followed by Tata Motors witnessing a contraction of 4.32 million of Open Interest in the September month contract; while Reliance Industries witnessed a contraction of 4.57 million of Open Interest in the September month futures contract, ICICI Bank witnessed a contraction 0.62 million of Open Interest in the September month contract and Infosys witnessed a contraction of 0.43 million of Open Interest in the September month's future contract.