Bears run berserk throughout session; Nifty ends tad above 7850 level

Bears hammered bulls throughout the session giving bulls no chance to pounce back, taking full control over the market, bears dragged Nifty below its crucial 7,900 mark. Sentiment on the street weakened on the report that FII inflows are getting muted over the past few weeks, showing signs that global outflows from emerging markets may have begun. Besides, exports of several agriculture products including rice, spices and tobacco have registered negative growth in August mainly due to decline in prices in the global commodity market also weighed on sentiment. In today’s trading session, the market has completely ignored some positive economic and industry related announcements, such as the World Bank in its latest report has stated that Indian economy, which accounts for 80 percent of South Asia's output, is set to grow by 6.4% in 2015-16 as against 5.6% in 2014-15. Besides, the activity in Indian services sector, which accounts for around 60% of country’s GDP, expanded in September as order books filled up at a faster rate.

After getting weak start, nifty continued its declining path and breached the psychological 7,900 mark in late morning trade. However, the key gauges made some attempts to recover in early afternoon trade but, pessimistic selling in the second half put the index once again on a declining path. Afterwards, nifty kept losing momentum through the session and finally ended the session tad above its crucial 7,850 mark with a cut of over a percentage point.

After a muted September, investors are expecting the volatile October ahead of India Inc's report card for the quarter ended September 2014 as well as key macro-economic data. There is also the Maharashtra state election which may impact sentiment. Besides, domestic issues such as coal block de-allocation and fading hopes of a rate hike in 2015 kept the markets under pressure. In the index option segment, maximum OI continues to be seen in the 8200-8100 calls and 7800-7700 puts indicating this is the trading range expectation.

The top gainers from the F&O segment were GMR Infrastructure, Apollo Tyres and Just Dial. On the other hand, the top losers were Petronet, DLF and NMDC. Meanwhile, India VIX - the gauge of underlying volatility in the market - has mostly witnessed a declining trend during the October month, but the situation will be different in September as VIX has recently formed a new 52-week low and rebounded thereafter.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 11.25% and reached 14.46. The 50-share CNX Nifty declined by 93.15 points or 1.17% to settle at 7,852.40. Nifty October 2014 futures closed at 7890.90 on Tuesday at a premium of 38.50 points over spot closing of 7852.40, while Nifty November 2014 futures ended at 7939.70 at a premium of 87.30 points over spot closing. Nifty October futures saw addition of 0.63 million (mn) units, taking the total outstanding open interest (OI) to 16.27 mn units. The near month derivatives contract will expire on October 30, 2014.

From the most active contracts, SBI October 2014 futures traded at a premium of 16.45 points at 2382.85 compared with spot closing of 2366.40. The number of contracts traded were 20,589.

Infy October 2014 futures traded at a discount of 19.45 points at 3811.85 compared with spot closing of 3831.30. The number of contracts traded were 19,881.

ICICI Bank October 2014 futures traded at a premium of 8.05 points at 1437.70 compared with spot closing of 1429.65. The number of contracts traded were 16,444.

Reliance Industries October 2014 futures traded at a premium of 4.95 points at 931.10 compared with spot closing of 926.15. The number of contracts traded were 14,564.

Tata Steel October 2014 futures traded at a premium of 3.15 points at 443.30 compared with spot closing of 440.15. The number of contracts traded were 13,167.

Among Nifty calls, 8000 SP from the October month expiry was the most active call with an addition of 1.25 million open interests. Among Nifty puts, 7,900 SP from the October month expiry was the most active put with a contraction of 0.30 million open interests. The maximum OI outstanding for Calls was at 8200 SP (5.42 mn) and that for Puts was at 7,800 SP (6.25 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7916.07 --- Pivot Point 7879.38 --- Support --- 7815.72.

The Nifty Put Call Ratio (PCR) finally stood at 1.04 for October month contract. The top five scrips with highest PCR on OI were Bajaj-Auto (0.99), Auro Pharma (0.94), Sun Pharma (0.90), Kotak Bank (0.87) and BPCL (0.80). 

Among most active underlying, Infosys witnessed an addition of 0.09 million of Open Interest in the October month futures contract, followed by State Bank of India witnessing an addition of 0.17 million of Open Interest in the October  month contract; while Tata Steel witnessed an addition of 1.64 million of Open Interest, Tata Motors witnessed with a contraction of 0.09 million of Open Interest in the October month contract and Aurobindo Pharma witnessed a contraction of 0.23 million of Open Interest in the October month's future contract.