Nifty trims losses by close of session; regains 8100 mark

The fifty stock index -- Nifty -- continued its southward journey for third consecutive day on Wednesday and finished the volatile session of trade with a cut of over three-tens of a percent. The sentiments were on pessimistic note as collapsing oil prices and worries about the world economy drove skittish investors into the arms of safe-haven sovereign debt. Sentiment on the street weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1,571 crore on January 06, 2015. However, losses remained capped on positive industry related announcement at domestic front such as the government aligned the Foreign Direct Investment policy with the upgraded National Industrial Classification Code to improve the ease of doing business and to boost foreign investment. Furthermore, in a customary pre-budget consultation with finance minister Arun Jaitley India Inc has pitched for reduction in corporate tax rate, aggressive disinvestment of government stake in public sector units, higher personal income tax exemption limits and a massive increase in public expenditure to boost growth. Traders were seen piling positions in Oil & Gas, Consumer Durables and PSU stocks while selling was witnessed in Metal, Bankex and Capital Goods sector stocks.

After getting a cautious start, nifty showed some strength in early morning trades, but the sentiments turned pessimistic in late morning trades and index slipped into red. The selling pressure accentuated in the mid afternoon trades as investors took to across the board selling due to risk aversion. However, some amount of recovery was witnessed from day’s low as market-participants took position in beaten down, but fundamentally strong stocks. Eventually, the index ended the day’s trade with a cut of over 25 points, holding its crucial 8,100 mark.

The top gainers from the F&O segment were United Breweries, Ashok Leyland and Indiabulls Housing Finance. On the other hand, the top losers were IRB Infrastructure Developers, Indraprastha Gas and Hindalco Industries. In the index options segment, maximum OI continues to be seen in the 8400-8300 calls and 8000-8100 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 increased by 4.13% and reached 18.14. The 50-share CNX Nifty was down by 25.25 points or 0.31% to settle at 8,102.10. Nifty January 2015 futures closed at 8141.85 on Wednesday at a premium of 39.75 points over spot closing of 8102.10, while Nifty February 2015 futures ended at 8196.15 at a premium of 94.05 points over spot closing. Nifty January futures saw contraction of 0.44 million (mn) units, taking the total outstanding open interest (OI) to 18.71 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 discount of 0.50 points at 59.60 compared with spot closing of 60.10. The number of contracts traded were 15,592.

State Bank of India January 2015 futures traded at a premium of 0.85 points at 302.25 compared with spot closing of 301.40. The number of contracts traded were 28,489.

ICICI Bank January 2015 futures traded at a premium of 0.45 points at 340.95 compared with spot closing of 340.50. The number of contracts traded were 24,397.

HDFC Bank January 2015 futures traded at a premium of 5.75 points at 950.55 compared with spot closing of 944.80. The number of contracts traded were 17,157.

Reliance Industries January 2015 futures traded at a premium of 0.30 points at 858.30 compared with spot closing of 858.00. The number of contracts traded were 29,382.Among Nifty calls, 8300 SP from the January month expiry was the most active call with an addition of 0.36 million open interests. Among Nifty puts, 8,000 SP from the January month expiry was the most active put with an addition of 0.69 million open interests. The maximum OI outstanding for Calls was at 8400 SP (5.93 mn) and that for Puts was at 8,000 SP (6.59 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8147.05 --- Pivot Point 8106.25 --- Support --- 8061.30.

The Nifty Put Call Ratio (PCR) finally stood at 1.03 for January month contract. The top five scrips with highest PCR on OI were IndusInd Bank (1.19), Grasim (1.18), BHEL (1.16), DLF (1.10) and Maruti Suzuki (1.04). 

Among most active underlying, State Bank of India witnessed an addition of 1.33 million of Open Interest in the January month futures contract, followed by Ashok Leyland witnessing an addition of 4.70 million of Open Interest in the January month contract; ICICI Bank witnessed an addition of 5.15 million of Open Interest in the January month contract, Reliance Industries witnessed a contraction of 1.28 million of Open Interest in the January month contract and Infosys witnessed a contraction of 0.25 million of Open Interest in the January month's future contract.