Bears run berserk throughout session; Nifty ends below 8950 level

Bears hammered bulls throughout the session giving bulls no chance to bounce back, taking full control over the market, bears dragged Nifty below its crucial 8,950 mark on account of profit booking after sharp gains in the previous few sessions. The sentiments were subdued from early morning trades, which deteriorated further on lower than expected corporate earnings posted by blue chip companies such as Bank of Baroda and ICICI Bank. The trading sentiments were also hit after RBI Deputy Governor H R Khan said that ‘unbridled’ financial inclusion drive could create problems and asked banks to take adequate safeguards in this regard. Khan said bankers are already concerned about the Rs 5,000 overdraft facility given under the Jan-Dhan Yojana and advised the lenders to device the right framework to deal with the issue. However, loses remained capped with an UN report stating that, notwithstanding the decline in global foreign direct investment inflows, India's FDI increased by 26 percent in 2014 to an estimated $35 billion with maximum growth in the services sector. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1,723.77 crore on January 29, 2015. Meanwhile, some traders remained on the sidelines and refrained from any buying activity ahead of RBI policy meeting on February 3, 2015.

After a positive opening, nifty slipped in negative territory and gradually enlarged its losses in late morning deals. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges traded on a lackluster note for most part of the trades. However, mild short covering in the final hour of trade helped Nifty to ease some of its losses. Barring Realty and IT, all other NSE sectoral indices ended significantly in the red. Among them, CNX PSU Bank index fell the most by 5.88 per cent, followed by Bank Nifty 3.34 per cent and CNX Finance 3.16 per cent.

February series was seeing higher rollovers and on the long side, suggesting traders expect momentum to continue.  Rollover in Nifty futures from January series to February was 76.52 % against the three-month average of 68.56 %, while Market wide rollovers were higher at 86.5% versus 3-month average of 85.34%. 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 top gainers from the F&O segment were HDIL, GMR Infrastructure and JP Associate. On the other hand, the top losers were Bank of Baroda, Canara Bank and Oriental Bank of Commerce. In the index options segment for February series, maximum OI continues to be seen in the 9000-9100 calls and 8500-8700 puts indicating the expected trading range.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.81% and reached 20.17. The 50-share CNX Nifty was down by 143.45 points or 1.60% to settle at 8,808.90. Nifty February 2015 futures closed at 8872.65 on Friday at a premium of 63.75 points over spot closing of 8808.90, while Nifty March 2015 futures ended at 8931.25 at a premium of 122.35 points over spot closing. Nifty February futures saw an addition of 0.75 million (mn) units, taking the total outstanding open interest (OI) to 25.50 million (mn) units. The near month derivatives contract will expire on February 26, 2015.

From the most active contracts, State Bank of India February 2015 futures traded at a premium of 2.20 points at 311.50 compared with spot closing of 309.30. The number of contracts traded were 45,049.

ICICI Bank February 2015 futures traded at a premium of 2.95 points at 363.20 compared with spot closing of 360.25. The number of contracts traded were 46,377.

IDFC February 2015 futures traded at a premium of 0.85 points at 173.50 compared with spot closing of 172.65. The number of contracts traded were 27,714.

HDFC Bank February 2015 futures traded at a premium of 7.10 points at 1088.15 compared with spot closing of 1081.05. The number of contracts traded were 30,706.

Axis Bank February 2015 futures traded at a premium of 4.15 points at 591.90 compared with spot closing of 587.75. The number of contracts traded were 34,879.

Among Nifty calls, 9000 SP from the February month expiry was the most active call with an addition of 1.81 million open interests. Among Nifty puts, 8,700 SP from the February month expiry was the most active put with an addition of 0.19 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.29 mn) and that for Puts was at 8,500 SP (2.37 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8945.30 --- Pivot Point 8860.20 --- Support --- 8723.80.

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for February month contract. The top five scrips with highest PCR on OI were UBL (2.44), Grasim (1.35), ACC (1.10), Apollo Hospitals Enterprise (1.06) and Aditya Birla Nuvo (1.04). 

Among most active underlying, ICICI Bank witnessed an addition of 6.09 million of Open Interest in the February month futures contract, followed by State Bank of India witnessing an addition of 7.71 million of Open Interest in the February month contract; Adani Enterprises  witnessed an addition of 0.93 million of Open Interest in the February month contract, Axis Bank  witnessed an addition of 0.80 million of Open Interest in the February month contract and IDFC witnessed an addtion of 1.65 million of Open Interest in the February month's future contract.