Nifty ends below 8,400 level on profit booking

After making a decent start, key Indian benchmark -- Nifty -- pared entire initial gains and ended the volatile day of trade in the red with a cut of over 17 points on Monday on the back of profit booking in second half of trade. Sentiment on the street weakened after report that India’s gold imports, which is one of the biggest contributors of high current account deficit (CAD), has increased by 8.5% to 849 tonne in the year compared to 2013. Besides, weak global cues coupled with depreciation in rupee value also weighed on the sentiment. However, losses remained capped as some support came from reports that foreign portfolio investors bought shares worth a net Rs 259.82 crore on January 2, 2015. Apart from sustained capital inflows, encouraging manufacturing output data for December and hopes of further push to economic reforms too supported the index. Traders were seen piling positions in Auto, Consumer Durables and Capital Goods while selling was witnessed in IT, Metal and Banking sector stocks.

After gap up opening, nifty showed some strength in early morning trades, but the sentiments turned pessimistic in early afternoon trades and index slipped into the red. Thereafter, the Index traded in a tight range till mid afternoon lingering near its neutral line and in the final hour of trade witnessed a steep fall of about 30 points on the back of profit booking. Finally, the index ended the day’s trade with a cut of over 17 points, holding its crucial 8350 mark.

The top gainers from the F&O segment were Ashok Leyland, Unitech and Apollo Tyres. On the other hand, the top losers were IRB Infrastructure Developers, Idea Cellular and Shriram Transport Finance Company. In the index options segment, maximum OI continues to be seen in the 8400-8600 calls and 8000-8200 puts indicating the expected trading range. 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 decreased by 8.18% and reached 13.79. The 50-share CNX Nifty was down by 17.05 points or 0.20% to settle at 8,378.40. Nifty January 2015 futures closed at 8422.85 on Monday at a premium of 44.45 points over spot closing of 8378.40, while Nifty February 2015 futures ended at 8479.50 at a premium of 101.10 points over spot closing. Nifty January futures saw contraction of 0.72 million (mn) units, taking the total outstanding open interest (OI) to 20.69 mn units. The near month derivatives contract will expire on January 29, 2015.

From the most active contracts, Ashok Leyland January 2015 futures traded at a premium of 0.05 points at 57.70 compared with spot closing of 57.65. The number of contracts traded were 16,080.

State Bank of India January 2015 futures traded at a premium of 2.20 points at 315.00 compared with spot closing of 312.80. The number of contracts traded were 17,455.

Reliance Industries January 2015 futures traded at a premium of 7.35 points at 882.90 compared with spot closing of 875.55. The number of contracts traded were 14,861.

ONGC January 2015 futures traded at a premium of 2.60 points at 356.10 compared with spot closing of 353.50. The number of contracts traded were 17,441.

Axis Bank January 2015 futures traded at a premium of 2.55 points at 519.05 compared with spot closing of 516.50. The number of contracts traded were 16,301.

Among Nifty calls, 8500 SP from the January month expiry was the most active call with an addition of 0.22 million open interests. Among Nifty puts, 8,400 SP from the January month expiry was the most active put with an addition of 0.21 million open interests. The maximum OI outstanding for Calls was at 8600 SP (3.66 mn) and that for Puts was at 8,000 SP (5.72 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8428.03 --- Pivot Point 8395.97 --- Support --- 8346.33.

The Nifty Put Call Ratio (PCR) finally stood at 1.24 for January month contract. The top five scrips with highest PCR on OI were Grasim (1.30), BHEL (1.20), YES Bank (1.13), UltraTech Cement (1.11), and DLF (1.06). 

Among most active underlying, Ashok Leyland witnessed an addition of 7.40 million of Open Interest in the January month futures contract, followed by Infosys witnessing an addition of 0.06 million of Open Interest in the January month contract; Larsen & Toubro witnessed a contraction of 0.19 million of Open Interest in the January month contract, State Bank of India witnessed an addition of 0.63 million of Open Interest in the January month contract and Tata Steel witnessed a contraction of 0.08 million of Open Interest in the January month's future contract.