Bears run berserk throughout session; Nifty ends below 8400 level

Bears hammered bulls throughout the session taking full control over the market, dragging the Nifty below its crucial 8,400 mark. The domestic index capitulated by over a percent on Tuesday as funds and retail investors indulged in selling activities amid weak global cues after crude oil dipped to fresh five-year lows. Sentiments were undermined as current account deficit widened to $10.1 billion or 2.1% of GDP in July-September quarter as compared to 1.2% of GDP a year-ago period. Besides, weak trend in Asian and European stocks coupled with depreciation in rupee value against the dollar also weighed on the sentiment. However, losses remained capped as Global credit rating agency Fitch, in its latest Global Economic Outlook, has highlighted that India will be the only BRIC country where growth picks up in 2014 to 5.6% and further accelerates to 6.5% in 2015 and 6.8 % in 2016, owing to the government's reforms to improve the business environment. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 4,984.60 crore on December 08, 2014.

The Nifty got off to a somber opening, extending the downtrend for the third straight session as pessimistic sentiments prevailed across Asian markets. After trading in a narrow range in early trades, the selling pressure accentuated in the mid afternoon as European peers opened on a subdued note after the Organization for Economic Cooperation and Development projected a slowdown in the Eurozone economic recovery. Thereafter, the key index failed to show any kind of bounce due to lack of encouraging leads. Eventually, the index ended the day’s trade with a cut of over a percent, below its crucial 8,400 mark.

All the sectoral indices on the NSE settled in the negative territory with CNX Metal losing the most, ending with a cut of about three percent followed by CNX PSU Bank down by 2.56% and CNX Media down by 2.32% on NSE sectoral space. 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 top gainers from the F&O segment were Havells India, Amtek Auto and Ranbaxy Laboratories. On the other hand, the top losers were India Cements, PFC and IFCI. In the index options segment, maximum OI continues to be seen in the 8600-8500 calls and 8400-8300 puts indicating the expected trading range.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 2.36% and reached 12.49. The 50-share CNX Nifty decreased by 97.55 points or 1.16% to settle at 8,340.70. Nifty December 2014 futures closed at 8393.45 on Tuesday at a premium of 52.75 points over spot closing of 8340.70, while Nifty January 2014 futures ended at 8452.40 at a premium of 111.70 points over spot closing. Nifty December futures saw an addition of 0.82 million (mn) units, taking the total outstanding open interest (OI) to 22.13 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 2.25 points at 308.65 compared with spot closing of 306.40. The number of contracts traded were 21,520.

HDFC Bank December 2014 futures traded at a premium of 6.75 points at 934.45 compared with spot closing of 927.70. The number of contracts traded were 19,333.

ONGC December 2014 futures traded at a discount of 1.75 points at 351.10 compared with spot closing of 352.85. The number of contracts traded were 16,668.

Reliance Industries December 2014 futures traded at a premium of 7.75 points at 947.50 compared with spot closing of 939.75. The number of contracts traded were 23,531.

Tata Motors December 2014 futures traded at a premium of 3.55 points at 506.80 compared with spot closing of 503.25. The number of contracts traded were 18,010.

Among Nifty calls, 8500 SP from the December month expiry was the most active call with an addition of 1.23 million open interests. Among Nifty puts, 8,300 SP from the December month expiry was the most active put with a contraction of 0.85 million open interests. The maximum OI outstanding for Calls was at 8500 SP (6.09 mn) and that for Puts was at 8,400 SP (5.44 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8413.30--- Pivot Point 8340.70--- Support --- 8299.30.

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 ITC (1.47), DLF (1.16), Shriram Transport Finance Company (1.06), Sun TV (1.03) and Kotak Bank (0.95). 

Among most active underlying, Infosys witnessed a contraction of 0.62 million of Open Interest in the December month futures contract, followed by State Bank of India witnessing a contraction of 0.23 million of Open Interest in the December month contract; while Reliance Industries witnessed  a contraction of 0.23 million of Open Interest, Larsen & Toubro witnessed an addition of 0.36 million of Open Interest in the December month contract and ICICI Bank witnessed a contraction of 0.34 million of Open Interest in the December month's future contract.