Bears run berserk late in the session; Nifty closes below 7750 level

After witnessing consolidation in previous session, the domestic index CNX Nifty drifted southward on Thursday and finished the day’s trade with a cut of about one and half percentage, closing tad below its crucial 7,750 mark. Sentiment on the street weakened as European shares reversed an early rebound and slipped again on Thursday, resuming their month-long sell-off on mounting worries over the strength of the global economy and concerns about deflation in the euro zone. Sentiment took a hit after India’s trade deficit widened to more than double at $14.25 billion in month of September as compared to $6.12 billion in the same month previous year as exports grew marginally and imports continued to expand at higher pace. However, losses remained capped as Indirect tax collections grew by 5.8 percent to Rs 2.42 lakh crore during April-September period of current fiscal as compared to Rs 2.29 lakh crore during the same period of previous financial year. Meanwhile, some investors remained on the sidelines and refrained from any buying activity ahead of Maharashtra and Haryana assembly elections results.

After a negative opening, nifty showed some strength in morning trades, the sentiments turned pessimistic in late morning trades and index drifted lower below. The index traded in a tight range till mid afternoon but in the final hour of trade it witnessed a steep fall of over 100 points.

After today’s sell-off, the nifty is likely to correct further as the global situation is quite precarious and FIIs have been selling on the back of risk aversion towards emerging markets. However, some long-term investors will use the correction as buying opportunity to go long. Besides, the fall in crude oil and commodity prices do have a beneficial impact on Indian economy both in terms of current account and fiscal deficit. Good macro data (inflation) and a favourable opinion poll for Maharashtra and Haryana assembly elections are definite positives, which will give strength to the market.

The top gainers from the F&O segment were DLF, Petronet and NMDC. On the other hand, the top losers were UBL, UPL and Crompton Greaves. 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 12.61% and reached 16.43. The 50-share CNX Nifty decreased by 115.80 points or 1.47% to settle at 7,748.20. Nifty October 2014 futures closed at 7778.10 on Thursday at a premium of 29.90 points over spot closing of 7,748.20, while Nifty November 2014 futures ended at 7823.35 at a premium of 75.15 points over spot closing. Nifty October futures saw contraction of 0.27 million (mn) units, taking the total outstanding open interest (OI) to 14.44 mn units. The near month derivatives contract will expire on October 30, 2014.

From the most active contracts, Reliance Industries October 2014 futures traded at a premium of 6.35 points at 936.35 compared with spot closing of 930.00. The number of contracts traded were 25,150.

DLF October 2014 futures traded at a discount of 0.20 points at 110.60 compared with spot closing of 110.80. The number of contracts traded were 38,251.

Axis Bank October 2014 futures traded at a premium of 1.45 points at 393.50 compared with spot closing of 392.05. The number of contracts traded were 13,103.

Tata Steel October 2014 futures traded at a premium of 4.75 points at 441.25 compared with spot closing of 436.50. The number of contracts traded were 21,494.

Tata Motors October 2014 futures traded at a premium of 0.90 points at 485.35 compared with spot closing of 484.45. The number of contracts traded were 14,098.

Among Nifty calls, 8000 SP from the October month expiry was the most active call with an addition of 1.05 million open interests. Among Nifty puts, 7,800 SP from the October month expiry was the most active put with a contraction of 0.80 million open interests. The maximum OI outstanding for Calls was at 8000 SP (6.31 mn) and that for Puts was at 7,800 SP (6.08 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7851.52 --- Pivot Point 7790.58 --- Support --- 7687.27.

The Nifty Put Call Ratio (PCR) finally stood at 0.92 for October month contract. The top five scrips with highest PCR on OI were SAIL (0.98), PNB (0.97), Kotak Bank (0.89), Gail (0.85) and Infosys (0.82). 

Among most active underlying, Infosys witnessed a contraction of 0.24 million of Open Interest in the October month futures contract, followed by Tata Consultancy Services witnessing an addition of 0.17 million of Open Interest in the October  month contract; while State Bank of India witnessed a contraction of 0.14 million of Open Interest, DLF witnessed a contraction of 3.34 million of Open Interest in the October month contract and Tata Steel witnessed a contraction of 1.29 million of Open Interest in the October month's future contract.