Nifty skids lower for second day in a row

The fifty stock index -- Nifty -- continued its southward journey for second consecutive day on Wednesday and finished the choppy day of trade with a cut of over two-tenths of a percent. Sentiment on the street weakened as the World Bank lowered its global growth forecast for 2015 and next year due to disappointing economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices. Besides, global commodity prices, copper in particular, slumped to fresh six-year lows on worries over global economic recovery, also weighed on the sentiment. However, losses were limited as slower-than-expected inflation in December raised hopes for an early rate cut in to help the economy out of its longest phase of sub-par growth since the 1980s. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 235 crore on January 13, 2015. Traders were seen piling positions in IT, TECK and Auto stocks while selling was witnessed in Metal, FMCG and Oil & Gas stocks.

After getting a cautious but positive start, nifty showed some strength in early morning trades, but the sentiments turned pessimistic in late morning trades and index slipped into red. Afterwards, Nifty traded near neutral line for most part of the day’s trade, lacking any significant upside triggers as investors engaged themselves in few stocks. Eventually, the index ended the day’s trade with a cut of about 22 points, holding its crucial 8,250 mark.

The top gainers from the F&O segment were Dabur, NHPC and BHEL. On the other hand, the top losers were SSLT, Hindalco and Hindustan Zinc. 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 continued its southward journey, 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 4.64% and reached 17.24. The 50-share CNX Nifty was down by 21.85 points or 0.26% to settle at 8,277.55. Nifty January 2015 futures closed at 8307.35 on Wednesday at a premium of 29.80 points over spot closing of 8277.55, while Nifty February 2015 futures ended at 8358.05 at a premium of 80.50 points over spot closing. Nifty January futures saw contraction of 0.40 million (mn) units, taking the total outstanding open interest (OI) to 17.57 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 306.35 compared with spot closing of 305.00. The number of contracts traded were 17,259.

ICICI Bank January 2015 futures traded at a premium of 0.55 points at 338.80 compared with spot closing of 338.25. The number of contracts traded were 18,067.

HDFC Bank January 2015 futures traded at a premium of 2.60 points at 967.60 compared with spot closing of 965.00. The number of contracts traded were 19,162.

Reliance Industries January 2015 futures traded at a premium of 1.50 points at 838.50 compared with spot closing of 837.00. The number of contracts traded were 18,184.

SSLT January 2015 futures traded at a premium of 2.35 points at 189.30 compared with spot closing of 186.95. The number of contracts traded were 15,331.

Among Nifty calls, 8400 SP from the January month expiry was the most active call with an addition of 0.27 million open interests. Among Nifty puts, 8,200 SP from the January month expiry was the most active put with a contraction of 0.43 million open interests. The maximum OI outstanding for Calls was at 8400 SP (4.88 mn) and that for Puts was at 8,000 SP (7.56 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8323.78--- Pivot Point 8280.22--- Support --- 8233.98.

The Nifty Put Call Ratio (PCR) finally stood at 1.31 for January month contract. The top five scrips with highest PCR on OI were HUL (1.52), BHEL (1.36), Ultratech Cement (1.31), Maruti Suzuki (1.17) and Century Textiles & Industries (1.12). 

Among most active underlying, Yes Bank witnessed an addition of 0.80 million of Open Interest in the January month futures contract, followed by Infosys witnessing a contraction of 0.26 million of Open Interest in the January month contract; Hindustan Unilever witnessed an addition of 0.72 million of Open Interest in the January month contract, LIC Housing Finance witnessed an addition of 0.09 million of Open Interest in the January month contract and ICICI Bank witnessed an addition of 2.68 million of Open Interest in the January month's future contract.