Nifty slips lower for second day in a row; ends below 8550 level

The local benchmark, Nifty continued its southward journey for second consecutive day on Tuesday and finished the volatile session with a cut of over thirty points as investors engaged themselves in booking profits at higher levels, while the RBI did not oblige with any rate cuts. However, expectations of an interest rate cut early next year were reinforced, capped the losses in equities. Further, losses remained restricted on the latest report that growth of eight core industries rose to 6.3 percent in October.

After a subdued opening, the key gauges plunged to lowest point in the day on sharp across the board sell-off. Report that foreign portfolio investors (FPIs) sold shares worth net Rs 12.36 crore on December 1, 2014, and global crude prices rising overnight dampened the sentiments of the traders. However the index pared some of its losses and even managed to break into the positive terrain in early afternoon trades as traders were encouraged by dovish statements made by the RBI about a possible rate-cut early next year on the back of improving inflation and macro-economic data. By the end of the session, Nifty slipped on profit booking and ended the day with a minor cut of around four tenths of a percent.

In the index options segment, maximum OI continues to be seen in the 8600-8700 calls and 8400-8500 puts indicating the expected trading range. In today's session, the 8600, 8700 and 8800 Call strikes saw addition of 8.03, 7.42 and 4.56 lakh shares, respectively. On the Put side, 8400 and 8300 strikes saw addition of 5.76 and 3.20 lakh shares, respectively.

The top gainers from the F&O segment were Asian Paint, Strides Arcolab and Titan Company. On the other hand, the top losers were Unitech, Indiabulls Real Estate and HDIL. 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 6.12% and reached 12.39. The 50-share CNX Nifty decreased by 31.20 points or 0.36% to settle at 8,524.70. Nifty December 2014 futures closed at 8575.35 on Tuesday at a premium of 50.60 points over spot closing of 8524.70, while Nifty January 2014 futures ended at 8629.10 at a premium of 104.40 points over spot closing. Nifty December futures saw contraction of 0.55 million (mn) units, taking the total outstanding open interest (OI) to 21.40 mn units. The near month derivatives contract will expire on December 24, 2014.

From the most active contracts, SBI December 2014 futures traded at a premium of 2.40 points at 321.10 compared with spot closing of 318.70. The number of contracts traded were 49,065.

ICICI Bank December 2014 futures traded at a premium of 7.70 points at 1778.20 compared with spot closing of 1,770.50. The number of contracts traded were 28,639.

PNB December 2014 futures traded at a premium of 4.10 points at 1099.75 compared with spot closing of 1,095.65. The number of contracts traded were 25,284.

HDFC Bank December 2014 futures traded at a premium of 8.25 points at 951.55 compared with spot closing of 943.30. The number of contracts traded were 22,953.

Reliance Industries December 2014 futures traded at a premium of 8.35 points at 971.00 compared with spot closing of 962.65. The number of contracts traded were 20,867.

Among Nifty calls, 8700 SP from the December month expiry was the most active call with an addition of 0.74 million open interests. Among Nifty puts, 8,500 SP from the December month expiry was the most active put with an addition of 0.05 million open interests. The maximum OI outstanding for Calls was at 8700 SP (5.06 mn) and that for Puts was at 8,500 SP (4.71 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8555.05--- Pivot Point 8529.85--- Support --- 8499.50.

The Nifty Put Call Ratio (PCR) finally stood at 0.87 for December month contract. The top five scrips with highest PCR on OI were Bajaj-Auto (1.22), DLF (1.16), Ranbaxy (1.10), Hindustan Petroleum Corporation (1.05) and Dr. Reddy's Laboratories (1.04). 

Among most active underlying, State Bank of India witnessed an addition of 2.14 million of Open Interest in the December month futures contract, followed by ICICI Bank witnessing an addition of 0.68 million of Open Interest in the December month contract; while Axis Bank witnessed  an addition of 1.03 million of Open Interest, Infosys witnessed a contraction of 0.61 million of Open Interest in the December month contract and Reliance Industries witnessed an addition of 0.46 million of Open Interest in the December month's future contract.