Nifty ends in red on profit-booking

Nifty wiped out all its intraday gains and ended the choppy day of trade with a cut of around three tenths of a percent as investors went for profit booking following past few sessions of strong gains. Sentiment on the street weakened on reports that foreign direct investment (FDI) in India’s services sector has declined by 9% to $1.08 billion during the April-August period of the ongoing fiscal as compared to $1.19 billion during the first five months of the previous fiscal. Indian services sector, which includes banking, insurance, outsourcing, R&D, courier and technology testing, represents around 60% share of the country’s GDP. Besides, mixed Asian and weak European trends, after tepid German business confidence data, were also among factors that affected sentiments. However, market losses remained capped as investors were seen piling up positions in Consumer Durables, Capital Goods and banking stocks. Some support also came in from reports that government has approved 20 FDI proposals, envisaging a total inflow of Rs 988.3 crore. Meanwhile, some domestic investors remained on the sidelines and refrained from any buying activity ahead of expiry of derivatives on October 30, 2014.

After gap up opening, nifty showed some strength in early morning trades, but the sentiments turned bearish in late morning and the index slipped into red terrain. Afterwards, Nifty traded near the neutral line for most part of the day’s trade, lacking any significant upside triggers as investors engaged themselves in few stocks. Eventually, the index ended the day’s trade with a cut of over 22 points, below its crucial 8,000 mark.

The top gainers from the F&O segment were BHEL, Eicher Motors and YES Bank. On the other hand, the top losers were Just Dial, Jindal Steel & Power and DLF. In the index option segment, maximum OI continues to be seen in the 8100-8000 calls and 7800-7900 puts indicating this is the trading range expectation.

Indian stock market is expected to witness volatility as traders roll over positions in the futures & options (F&O) segment from the near month October 2014 series to November 2014 series, while market will also watch the two day US Fed meeting ending on Wednesday for comments on the direction of interest rates.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 5.07% and reached 13.51. The 50-share CNX Nifty decreased by 22.85 points or 0.29% to settle at 7,991.70. Nifty October 2014 futures closed at 7998.00 on Monday at a premium of 6.30 points over spot closing of 7991.70, while Nifty November 2014 futures ended at 8042.80 at a premium of 51.10 points over spot closing. Nifty October futures saw contraction of 0.99 million (mn) units, taking the total outstanding open interest (OI) to 15.96 mn units. The near month derivatives contract will expire on October 30, 2014.

From the most active contracts, BHEL October 2014 futures traded at a discount of 2.60 points at 250.10 compared with spot closing of 252.70. The number of contracts traded were 18,201.

Reliance Industries October 2014 futures traded at a discount of 0.40 points at 942.20 compared with spot closing of 942.60. The number of contracts traded were 45,939.

HDFC Bank October 2014 futures traded at a premium of 3.00 points at 899.90 compared with spot closing of 896.90. The number of contracts traded were 29,198.

DLF October 2014 futures traded at a premium of 0.80 points at 110.80 compared with spot closing of 110.00. The number of contracts traded were 19,766.

ICICI Bank October 2014 futures traded at a premium of 0.10 points at 1575.15 compared with spot closing of 1575.05. The number of contracts traded were 18,589.

Among Nifty calls, 8000 SP from the October month expiry was the most active call with an addition of 0.26 million open interests. Among Nifty puts, 8,000 SP from the October month expiry was the most active put with an addition of 0.05 million open interests. The maximum OI outstanding for Calls was at 8100 SP (7.05 mn) and that for Puts was at 7,900 SP (5.57 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8042.18 --- Pivot Point 8013.92 --- Support --- 7963.43.

The Nifty Put Call Ratio (PCR) finally stood at 1.06 for October month contract. The top five scrips with highest PCR on OI were Bajaj-Auto (1.60), BHEL (1.48), Kotak Bank (1.47), SAIL (1.45) and Axis Bank (1.44). 

Among most active underlying, Reliance Industries witnessed a contraction of 7.53 million of Open Interest in the October month futures contract, followed by HDFC Bank witnessing a contraction of 9.37 million of Open Interest in the October  month contract; while State Bank of India witnessed a contraction of 0.47 million of Open Interest, BHEL witnessed a contraction of 9.78 million of Open Interest in the October month contract and Hindustan Unilever witnessed a contraction of 0.76 million of Open Interest in the October month's future contract.