Nifty ends choppy day of trade with marginal losses

The fifty stock index -- Nifty -- ended the choppy day of trade with a marginal cut on Monday. After positive opening, nifty slipped in red in morning trade but witnessed some recovery in later morning trade on emergence of buying by funds and retail investors in select stocks. Thereafter, the indices failed to capitalize on the initial momentum and continued to see-saw around the neutral line for most part of the day. Eventually, the index ended the day’s trade with a cut of over one tens of a percent, below its crucial 8,000 mark.

Sentiment on the street weakened as rate-sensitive stocks such as ICICI Bank fell a day ahead of the Reserve Bank of India’s policy review, although exporters gained after the rupee weakened. Falls also tracked lower Asian and European shares after an upwards revision to US economic growth estimate for the second quarter raised fears of a Fed rate hike, while political unrest in Hong Kong weighed on Asian sentiment. However, losses remained capped as Standard & Poor's lifted India's rating outlook to 'stable' from 'negative', acknowledging efforts by the Narendra Modi government to maintain fiscal discipline while reviving the economy and drumming up investment, giving the prime minister a timely boost as his key US trip gets underway. Some support also came in from reports that Private equity investment in India is likely to touch a staggering $12 billion in 2014 primarily on account of reform measures taken by the government at the Centre.

The top gainers from the F&O segment were Auro Pharma, TVS Motor and DIVIS LAB. The top losers were PFC, Jindal Steel and JP Associate. In the index options segment, maximum OI continues to be seen in the 8200-8100 calls and 7800-7900 puts indicating the expected trading range. In today's session, some strategists have been creating long strangles in Nifty, buying calls at 8100 and 8200 levels and buying puts at 7900 and 7800 levels as they expecting high volatility tomorrow due to RBI’s policy review.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.53% and reached 13.38. The 50-share CNX Nifty declined 9.95 points or 0.12% to settle at 7,958.90. Nifty October 2014 futures closed at 7993.90 on Monday at a premium of 35.00 points over spot closing of 7,958.90, while Nifty November 2014 futures ended at 8044.55 at a premium of 85.65 points over spot closing. Nifty October futures saw contraction of 0.90 million (mn) units, taking the total outstanding open interest (OI) to 15.50 mn units. The near month derivatives contract will expire on October 30, 2014.

From the most active contracts, HDFC Bank October 2014 futures traded at a premium of 5.80 points at 872.05 compared with spot closing of 866.25. The number of contracts traded were 11,008.

Reliance Industries October 2014 futures traded at a premium of 9.90 points at 943.25 compared with spot closing of 933.35. The number of contracts traded were 23,268.

Tata Steel October 2014 futures traded at a premium of 4.50 points at 470.50 compared with spot closing of 466.00. The number of contracts traded were 8,742.

Sun Pharmaceutical Industries October 2014 futures traded at a premium of 3.70 points at 839.70 compared with spot closing of 836.00. The number of contracts traded were 11,734.

Aurobindo Pharma October 2014 futures traded at a premium of 9.85 points at 955.30 compared with spot closing of 945.45. The number of contracts traded were 18,441. Among Nifty calls, 8100 SP from the October month expiry was the most active call with an addition of 0.60 million open interests. Among Nifty puts, 7,900 SP from the October month expiry was the most active put with an addition of 0.12 million open interests. The maximum OI outstanding for Calls was at 8200 SP (5.13 mn) and that for Puts was at 7,800 SP (5.08 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7988.87--- Pivot Point 7961.78--- Support --- 7931.82.

The Nifty Put Call Ratio (PCR) finally stood at 1.02 for October month contract. The top five scrips with highest PCR on OI were Bajaj-Auto (1.11), TCS (1.08), CESC (1.07), Cairn (1.05) and ACC (1.04). 

Among most active underlying, State Bank of India witnessed a contraction of 0.17 million of Open Interest in the October month futures contract, followed by Aurobindo Pharma witnessing an addition of 0.60 million of Open Interest in the October  month contract; while Reliance Industries witnessed a contraction of 0.72 million of Open Interest, Infosys witnessed a contraction of 0.02 million of Open Interest in the October month contract and Tata Steel witnessed an addition of 0.66 million of Open Interest in the October month's future contract.