Nifty skids lower for third day in a row; closes near 8750

The fifty stock index -- Nifty -- continued its southward journey for third consecutive day on Tuesday and finished the volatile session of trade with a cut of about half a percent weighed down by weakness in the interest rate-sensitive stocks including real-estate companies, auto and banks after the Reserve Bank of India kept the policy rates unchanged. In its policy stance and Rationale, RBI pointed that the key to further easing would be data confirming continuality of disinflationary pressures along with sustained high quality fiscal consolidation. Further, it underscored that in absence of any substantial new developments on the disinflationary process or on the fiscal outlook since January 15, it was appropriate for RBI to await and maintain the current interest rate stance. Besides, disappointing growth in the eight Indian core sectors, which contribute to 38% of the industrial production, slowed to three month low of 2.4% in December from 6.7% in November 2014 also weighed on the sentiments. However, losses remained capped as Oil shares surged higher after the sharp rebound in global crude oil prices. Some support also came in from European markets, which rallied on hopes of an agreement on the Greek debt standoff after the country’s new government dropped calls for a write-off of its foreign debt and proposed swapping debt for growth-linked bonds.

After gap up opening, nifty slowly paired most of its gains in early trade, but it was in afternoon session when the index witnessed a steep fall of over 60 points weighed down by selling in rate sensitive shares post the RBI credit policy. Although RBI’s policy stance was much on expected lines, but no guidance on further rate cut stressed investors, which preferred booking profits after the anticipated move. Thereafter, the index kept slowly but steadily moving towards the neutral line. However, profit-booking which kicked off in the last hour of trade put the nifty once again into declining path and ended the day’s trade with loss of about half a percent, near its crucial 8,750 level. 

Most of the sectoral indices on the NSE settled in the negative territory with CNX PSU Bank losing the most, ending with a loss of over two and a half percent followed CNX Finance down by 2.51% and Bank Nifty up by 2.43% while, CNX Energy up 1.68%, CNX FMCG up 1.02% and CNX Metal up by 0.79% remained the top gainers on NSE sectoral space.

The top gainers from the F&O segment were SSLT, Arvind and UPL. On the other hand, the top losers were JSW Energy, PNB and PFC. In the index options segment for February series, maximum OI continues to be seen in the 9000-9100 calls and 8500-8600 puts indicating the expected trading range.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.93% and reached 19.80. The 50-share CNX Nifty was down by 40.85 points or 0.46% to settle at 8,756.55. Nifty February 2015 futures closed at 8809.90 on Tuesday at a premium of 53.35 points over spot closing of 8756.55, while Nifty March 2015 futures ended at 8869.20 at a premium of 112.65 points over spot closing. Nifty February futures saw an addition of 0.42 million (mn) units, taking the total outstanding open interest (OI) to 25.39 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 2.75 points at 302.40 compared with spot closing of 299.65. The number of contracts traded were 42,094.

ICICI Bank February 2015 futures traded at a premium of 1.90 points at 348.90 compared with spot closing of 347.00. The number of contracts traded were 30,606.

HDFC Bank February 2015 futures traded at a premium of 12.95 points at 1070.70 compared with spot closing of 1057.75. The number of contracts traded were 35,354.

Punjab National Bank February 2015 futures traded at a premium of 1.55 points at 177.40 compared with spot closing of 175.85. The number of contracts traded were 41,985.

Reliance Industries February 2015 futures traded at a premium of 7.25 points at 943.55 compared with spot closing of 936.30. The number of contracts traded were 34,497.

Among Nifty calls, 9000 SP from the February month expiry was the most active call with a contraction of 0.35 million open interests. Among Nifty puts, 8,700 SP from the February month expiry was the most active put with an addition of 0.10 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.48 mn) and that for Puts was at 8,600 SP (2.55 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8820.35 --- Pivot Point 8773.50 --- Support --- 8709.70.

The Nifty Put Call Ratio (PCR) finally stood at 0.84 for February month contract. The top five scrips with highest PCR on OI were Bata India (1.25), Grasim (1.24), IndusInd Bank (1.21), L&T (1.05) and HCL Tech (1). 

Among most active underlying, Axis Bank witnessed an addition of 1.44 million of Open Interest in the February month futures contract, followed by State Bank of India witnessing an addition of 5.68 million of Open Interest in the February month contract; ICICI Bank witnessed an addition of 1.68 million of Open Interest in the February month contract, Reliance Industries witnessed a contraction of 0.80 million of Open Interest in the February month contract and Punjab National Bank witnessed a contraction of 0.85 million of Open Interest in the February month's future contract.