Nifty ends with slender loss; manages to hold 7,850 level

The local benchmark, Nifty witnessed a consolidation in today’s session as investors turned cautious ahead of Maharashtra and Haryana elections that will be held on Wednesday. After cheerful opening, nifty slipped into the negative territory in late morning trade as gains in Reliance Industries failed to offset losses in IT shares and realty major DLF. Although, nifty made a gap-up opening as sentiments remained up-beat after retail inflation dropped to 6.46 per cent in September on falling prices of fruits and vegetables, the lowest since India started computing Consumer Price Index (CPI) in January 2012. However, sentiment turned pessimistic in late morning trade with RBI governor Raghuram Rajan stating that Indian economic recovery is still uneven, although he has exuded optimism that the country will be 'solidly' in the 5 percent growth bracket during the course of this fiscal and accelerate further in the next financial year. Some mild weakness also came after the Supreme Court ruled that iron ore mined before 2007 in Goa belongs to the State. Besides, heavyweight like DLF, which tumbled up to 25% after the Securities and Exchange Board of India (Sebi) banned the company and six executive from accessing the capital markets for three years, is also the culprit for drop in market.

In afternoon trade nifty trimmed most of its losses as India's main inflation gauge, based on monthly WPI, easing at 33-month low, stood at 2.78% for the month of September as compared to 3.74% in the previous month and 7.05% during the corresponding month of the previous year. However, some late hour selling in frontline blue chip counters taking clues from European counterparts push the nifty once again into the red terrain. Finally, Nifty concluded the volatile day of trade with a cut of over two tenths of a percent. 

The market is likely to remain rang bond in near term as Investors are awaiting the Maharashtra and Haryana state election results on the expectation that once this event is out of the way, the Prime Minister will look at administration changes and reforms. The top gainers from the F&O segment were LIC Housing Finance, BHEL and Shriram Transport Finance Company. On the other hand, the top losers were DLF, Sun TV and HDIL. 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 India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.63% and reached 14.59. The 50-share CNX Nifty decreased by 20.25 points or 0.26% to settle at 7,884.25. Nifty October 2014 futures closed at 7895.25 on Tuesday at a premium of 31.25 points over spot closing of 7,864.00, while Nifty November 2014 futures ended at 7941.05 at a premium of 77.05 points over spot closing. Nifty October futures saw contraction of 0.10 million (mn) units, taking the total outstanding open interest (OI) to 14.71 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 6.60 points at 873.60 compared with spot closing of 867.00. The number of contracts traded were 12,097.

Reliance Industries October 2014 futures traded at a premium of 3.80 points at 964.25 compared with spot closing of 960.45. The number of contracts traded were 33,418.

DLF October 2014 futures traded at a discount of 0.30 points at 105.50 compared with spot closing of 105.80. The number of contracts traded were 64,303.

Axis Bank October 2014 futures traded at a premium of 0.40 points at 398.15 compared with spot closing of 397.75. The number of contracts traded were 15,817.

SSLT October 2014 futures traded at a premium of 1.35 points at 250.15 compared with spot closing of 248.80. The number of contracts traded were 30,116.

Among Nifty calls, 8000 SP from the October month expiry was the most active call with an addition of 0.16 million open interests. Among Nifty puts, 7,800 SP from the October month expiry was the most active put with a contraction of 0.06 million open interests. The maximum OI outstanding for Calls was at 8200 SP (5.93 mn) and that for Puts was at 7,800 SP (7.17 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7919.52 --- Pivot Point 7872.48 --- Support --- 7816.97.

The Nifty Put Call Ratio (PCR) finally stood at 1.03 for October month contract. The top five scrips with highest PCR on OI were PNB (1.01), SAIL (0.99), BHEL (0.98), Kotak Bank (0.97) and Infosys (0.88). 

Among most active underlying, DLF witnessed an addition of 5.60 million of Open Interest in the October month futures contract, followed by State Bank of India witnessing a contraction of 0.09 million of Open Interest in the October  month contract; while Infosys witnessed a contraction of 0.03 million of Open Interest, Reliance Industries witnessed a contraction of 0.25 million of Open Interest in the October month contract and Sesa Sterlite witnessed a contraction of 0.54 million of Open Interest in the October month's future contract.