Final hour profit booking prompts Nifty to close below 8,300 mark

The local benchmark, Nifty ended the lackluster day of trade on a weak note. The index made a positive start on the back of release of positive macro-economic data i.e. November IIP and December CPI released after market hours on Monday. The index for IIP for the month of November hit a five-month high of 3.8% at 169.8, higher than street’s expectation of figure of over 2%, while, India’s Consumer Price Index (CPI), snapping four consecutive months easing trend, edged higher to 5% in December as compared 4.38% in November. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 245 crore on January 12, 2015. However, profit-booking which kicked in the last hour of trade mainly in rate sensitive shares as well as oil shares, dragged nifty at day’s low point. Sentiment on the street weakened as Brent crude and US WTI both falling to their lowest in almost six years, as a persistent global supply glut offset data showing record high imports by key consumer China. Meanwhile, some investors remained on the sidelines and refrained from any buying activity ahead of December WPI data, which scheduled to be released on January 14, 2015. Wholesale price inflation, which was flat in November, is expected to have picked up to 0.6 percent last month.

After a positive opening, Indian equity benchmark Nifty traded in the tight range till mid afternoon lingering near its neutral line, however in the final hour of session it witnessed a steep fall of about 80 points as crude prices slid towards six-year lows hitting sentiment and triggering profit-booking in shares after a three-day robust rally. Finally, Nifty ended the day’s trade with a cut of over 23 points, just below its crucial 8,300 mark.

The top gainers from the F&O segment were SKS Microfinance, Just Dial and UltraTech Cement. On the other hand, the top losers were Unitech, IRB Infrastructure Developers and Indiabulls Real Estate. In the index options segment, maximum OI continues to be seen in the 8400-8500 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 0.37% and reached 16.48. The 50-share CNX Nifty was down by 23.60 points or 0.28% to settle at 8,299.40.

Nifty January 2015 futures closed at 8316.50 on Tuesday at a premium of 17.10 points over spot closing of 8299.40, while Nifty February 2015 futures ended at 8366.70 at a premium of 67.30 points over spot closing. Nifty January futures saw an addition of 0.42 million (mn) units, taking the total outstanding open interest (OI) to 17.98 mn units. The near month derivatives contract will expire on January 29, 2015.

From the most active contracts, State Bank of India January 2015 futures traded at a premium of 1.35 points at 306.60 compared with spot closing of 305.25. The number of contracts traded were 20,926.

ICICI Bank January 2015 futures traded at a premium of 0.50 points at 342.25 compared with spot closing of 341.75. The number of contracts traded were 15,070.

HDFC Bank January 2015 futures traded at a premium of 3.00 points at 966.05 compared with spot closing of 963.05. The number of contracts traded were 18,164.

Reliance Industries January 2015 futures traded at a premium of 1.05 points at 846.05 compared with spot closing of 845.00. The number of contracts traded were 16,354.

Axis Bank January 2015 futures traded at a discount of 0.50 points at 503.30 compared with spot closing of 503.80. The number of contracts traded were 25,614.Among Nifty calls, 8400 SP from the January month expiry was the most active call with an addition of 0.18 million open interests. Among Nifty puts, 8,300 SP from the January month expiry was the most active put with an addition of 0.22 million open interests. The maximum OI outstanding for Calls was at 8400 SP (4.60 mn) and that for Puts was at 8,000 SP (7.32 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8348.07--- Pivot Point 8307.98--- Support --- 8259.32.

The Nifty Put Call Ratio (PCR) finally stood at 1.34 for January month contract. The top five scrips with highest PCR on OI were HUL (1.32), Ultratech Cement (1.18), BHEL (1.14), Grasim (1.14) and Maruti Suzuki (1.06). 

Among most active underlying, Infosys witnessed a contraction of 0.73 million of Open Interest in the January month futures contract, followed by Hindustan Unilever witnessing an addition of 7.76 million of Open Interest in the January month contract; State Bank of India witnessed an addition of 0.39 million of Open Interest in the January month contract, Yes Bank witnessed an addition of 0.67 million of Open Interest in the January month contract and ICICI Bank witnessed an addition of 0.26 million of Open Interest in the January month's future contract.