Nifty erases most intra-day gains; ends flat below 8000 level

The fifty stock index -- Nifty -- continued its consolidation for second consecutive day on Tuesday and finished the volatile day of trade with a gains of just over five points. After getting a cautious but positive start, nifty was trading in a small range seesawing around the neutral line as funds and retail investors remained on the sidelines ahead of RBI’s monetary policy review. However, the RBI’s decision to keep interest rate unchanged was largely in line with investor expectations and had little impact on buying by participants but profit-booking at higher levels in last leg of trade, minimised the gains. Finally, Nifty ended the session slightly in the positive terrain with a gain of just over five points.

Sentiment got some support from Prime Minister Narendra Modi pitching for investments from some of the largest American corporations with the promise of a stable tax policy and an assertion that he wanted to convert the Supreme Court ruling on coal block allocation into an opportunity to move forward and ‘clean up the past’. However, sharp selling in interest-sensitive stocks of banking and realty, after the RBI kept interest rates unchanged in its bi-monthly monetary policy, erased most of its gains.

The consolidation is likely to continue in near term due to lack of triggers. As the RBI event is behind us, the market will closely watch July-September quarter earnings that will kick off with Infosys’ numbers on October 10, 2014.

The top gainers from the F&O segment were Eicher Motors, Apollo Tyre and MRF. The top losers were Indiabulls Real Estate, Unitech and DLF. 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. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session, which indicates that traders have slowdown buying options contracts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.79% and reached 13.14. The 50-share CNX Nifty rose 5.90 points or 0.07% to settle at 7,964.80. Nifty October 2014 futures closed at 7999.15 on Tuesday at a premium of 34.35 points over spot closing of 7,964.80, while Nifty November 2014 futures ended at 8046.40 at a premium of 81.60 points over spot closing. Nifty October futures saw an addition of 0.19 million (mn) units, taking the total outstanding open interest (OI) to 15.70 mn units. The near month derivatives contract will expire on October 30, 2014.

From the most active contracts, IDFC October 2014 futures traded at a premium of 0.45 points at 137.75 compared with spot closing of 137.30. The number of contracts traded were 12,749.

HDFC Bank October 2014 futures traded at a premium of 8.60 points at 880.80 compared with spot closing of 872.20. The number of contracts traded were 15,260.

Reliance Industries October 2014 futures traded at a premium of 8.70 points at 952.70 compared with spot closing of 944.00. The number of contracts traded were 27,290.

Axis Bank October 2014 futures traded at a discount of 2.20 points at 376.50 compared with spot closing of 378.70. The number of contracts traded were 13,435.

Sun Pharmaceutical Industries October 2014 futures traded at a premium of 2.90 points at 858.90 compared with spot closing of 856.00. The number of contracts traded were 12,564. Among Nifty calls, 8100 SP from the October month expiry was the most active call with an addition of 0.29 million open interests. Among Nifty puts, 7,900 SP from the October month expiry was the most active put with an addition of 1.43 million open interests. The maximum OI outstanding for Calls was at 8200 SP (5.61 mn) and that for Puts was at 7,800 SP (5.80 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8022.52--- Pivot Point 7973.18--- Support --- 7915.47.

The Nifty Put Call Ratio (PCR) finally stood at 1.10 for October month contract. The top five scrips with highest PCR on OI were Bajaj-Auto (1.07), BPCL (1.03), ACC (1.96), Hindalco (0.93) and Auro Pharma (0.93). 

Among most active underlying, State Bank of India witnessed a contraction of 0.13 million of Open Interest in the October month futures contract, followed by ICICI Bank witnessing an addition of 0.07 million of Open Interest in the October  month contract; while Reliance Industries witnessed a contraction of 0.51 million of Open Interest, Aurobindo Pharma witnessed a contraction of 0.35 million of Open Interest in the October month contract and Larsen & Toubro witnessed an addition of 0.24 million of Open Interest in the October month's future contract.