Nifty snaps three days winning streak; ends below 8,300 mark

The local benchmark, Nifty ended the volatile day of trade in the red. Though, the market traded in the positive terrain during first half but, slipped in red in the second half on the back of selling witnessed in Realty, Capital Goods and Power sector stocks. Earlier, the Indian equity markets made a positive start tracking firm cues from global indices. Buying in coal and power related stocks too supported the sentiments, as an advisory group on integrated development of power, coal and renewable energy, in its report submitted to coal minister Piyush Goyal, suggested opening up the coal sector to augment coal output for fuel-hungry thermal power plants in the country. However in the mid afternoon session, market took U-turn and started its south bound journey on risk aversion after Chinese stocks posted their biggest daily drop in two weeks while caution prevailed a day ahead of the monthly derivatives expiry. The sentiments weakened as progress on key reform proposals, particularly the Insurance Laws (Amendment) Bill that would have enabled the insurance industry to have up to 49% foreign investment, failed to meet market expectations. Selling by foreign institutional investors continued unabated and they were net sellers in Indian equities worth Rs 335.24 crore on Monday, also weighed on the sentiment. Furthermore, traders were bit cautious with an official of international credit ratings agency Moody’s statement that high fiscal deficits constrain India’s rating now.

Going forward, the market may remain volatile in tomorrow’s trade as participants may roll over positions in the Futures & Options (F&O) segment from near month i.e. December 2014 series to next month i.e. January 2015 series. The near month December 2014 derivatives contracts will expire on Wednesday i.e. December 24, 20014. The stock market will remain close on Thursday i.e. December 25, 2014, on account of Christmas holiday. In the index options segment, maximum OI continues to be seen in the 8300-8400 calls and 8200-8100 puts indicating the expected trading range.

The top gainers from the F&O segment were Indraprastha Gas, Wockhardt and Glenmark Pharmaceuticals. On the other hand, the top losers were Jain Irrigation Systems, Voltas and Reliance Communications. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in the last two weeks, which show 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 7.65% and reached 15.29. The 50-share CNX Nifty declined by 57.00 points or 0.68% to settle at 8,267.00. Nifty December 2014 futures closed at 8271.55 on Tuesday at a premium of 4.55 points over spot closing of 8,267.00, while Nifty January 2014 futures ended at 8340.40 at a premium of 73.40 points over spot closing. Nifty December futures saw contraction of 4.59 million (mn) units, taking the total outstanding open interest (OI) to 13.35 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 0.95 points at 307.45 compared with spot closing of 306.50. The number of contracts traded were 31,148.

ICICI Bank December 2014 futures traded at a premium of 0.85 points at 354.00 compared with spot closing of 353.15. The number of contracts traded were 26,939.

Reliance Industries December 2014 futures traded at a premium of 0.75 points at 894.75 compared with spot closing of 894.00. The number of contracts traded were 46,213.

Tata Steel December 2014 futures traded at a premium of 0.75 points at 395.25 compared with spot closing of 394.50. The number of contracts traded were 27,097.

Tata Motors December 2014 futures traded at a premium of 0.40 points at 488.45 compared with spot closing of 488.05. The number of contracts traded were 25,026.Among Nifty calls, 8300 SP from the December month expiry was the most active call with an addition of 1.70 million open interests. Among Nifty puts, 8,200 SP from the December month expiry was the most active put with a contraction of 1.22 million open interests. The maximum OI outstanding for Calls was at 8300 SP (5.44 mn) and that for Puts was at 8,200 SP (4.98 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8336.88 --- Pivot Point 8294.87 --- Support --- 8224.98.

The Nifty Put Call Ratio (PCR) finally stood at 0.92 for December month contract. The top five scrips with highest PCR on OI were kotak Bank (1.13), SUN TV (1.11), PNB (1.04), Eicher Motors (1) and ZEEL (0.98). 

Among most active underlying, State Bank of India witnessed a contraction of 1.17 million of Open Interest in the December month futures contract, followed by Infosys witnessing a contraction of 2.28 million of Open Interest in the December month contract; while HDFC Bank witnessed  a contraction of 10.16 million of Open Interest, ICICI Bank witnessed a contraction of 12.06 million of Open Interest in the December month contract and Reliance Industries witnessed a contraction of 7.68 million of Open Interest in the December month's future contract.