Nifty ends below 8500 level on unrelenting selling pressure

The fifty stock index -- Nifty -- started the new week on a disturbing note as the index went on to extend its declining streak for the second successive session as market participants resorted to hefty across the board selling. Sentiments remained dismal with report that India’s engineering exports to China declined nearly 50% in the month of October due to prevailing slowdown in its economy. Sentiments weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 109.45 crore on December 05, 2014. European stock markets getting off to a gap down beginning to trade with nasty cuts of over a quarter percent, while the Asian counterparts settling on a bleak note with some losses, further weighed on the sentiments in the domestic index. However, losses remained capped as Prime Minister Narendra Modi stated that a new body, which would be structured to meet the need of changing economic paradigm and comprise sectoral experts and states’ representatives, would replace Planning Commission.

The benchmark got off to a sluggish beginning, tracking the weak Asian markets as investors chose to take profits off the table ahead of the major macro data of IIP, CPI and WPI later in the week. After trading in a narrow range in early trades, the selling pressure aggravated which dragged the index to lower levels. The frontline indices attempted to pare some losses in afternoon trades but eventually the index ended the session around day’s lows. Traders were seen piling positions in FMCG and Media sector while selling was witnessed in Information Technology (IT), Realty and Auto sector stocks.

In near-term, the market is likely to witness bit of profit booking and may correct as much as five per cent in the rest of the month, but the overall trend still remains intact and investors can look at accumulating stocks at lower levels. 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.

The top gainers from the F&O segment were Auro Pharma, L&T Finance Holdings and Sun TV. On the other hand, the top losers were Arvind, CESC and Infosys. Meanwhile, India VIX - the gauge of underlying volatility in the market - - has risen in today's session, which shows that traders are buying more options contracts as insurance against declines in the market.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 2.15% and reached 12.20. The 50-share CNX Nifty decreased by 100.05 points or 1.17% to settle at 8,438.25. Nifty December 2014 futures closed at 8489.75 on Monday at a premium of 51.50 points over spot closing of 8438.25, while Nifty January 2014 futures ended at 8548.45 at a premium of 110.20 points over spot closing. Nifty December futures saw an addition of 1.16 million (mn) units, taking the total outstanding open interest (OI) to 21.30 mn units. The near month derivatives contract will expire on December 24, 2014. From the most active contracts, State Bank of India December 2014 futures traded at a premium of 2.10 points at 315.10 compared with spot closing of 313.00. The number of contracts traded were 16,997.

HDFC Bank December 2014 futures traded at a premium of 6.20 points at 934.00 compared with spot closing of 927.80. The number of contracts traded were 15,380.

Reliance Industries December 2014 futures traded at a premium of 8.35 points at 952.45 compared with spot closing of 944.10. The number of contracts traded were 17,207.

DLF December 2014 futures traded at a premium of 0.05 points at 160.55 compared with spot closing of 160.50. The number of contracts traded were 12,627.

Tata Motors December 2014 futures traded at a premium of 3.65 points at 519.25 compared with spot closing of 515.60. The number of contracts traded were 14,345.

Among Nifty calls, 8600 SP from the December month expiry was the most active call with an addition of 0.88 million open interests. Among Nifty puts, 8,500 SP from the December month expiry was the most active put with a contraction of 0.77 million open interests. The maximum OI outstanding for Calls was at 8600 SP (6.29 mn) and that for Puts was at 8,400 SP (5.74 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8512.32--- Pivot Point 8472.28--- Support --- 8398.22.

The Nifty Put Call Ratio (PCR) finally stood at 0.90 for December month contract. The top five scrips with highest PCR on OI were Eicher Motors (1.57), ITC (1.56), DLF (1.31), Sun TV (1.11) and PNB (1.04). 

Among most active underlying, Infosys witnessed an addition of 2.77 million of Open Interest in the December month futures contract, followed by State Bank of India witnessing an addition of 0.75 million of Open Interest in the December month contract; while Reliance Industries witnessed  an addition of 0.41 million of Open Interest, Axis Bank witnessed a contraction of 0.01 million of Open Interest in the December month contract and Larsen & Toubro witnessed an addition of 0.17 million of Open Interest in the December month's future contract.