Nifty prolongs downtrend for fourth consecutive session

The fifty stock index -- Nifty -- closed in the red territory for the fourth consecutive session as financials extended huge losses the second day after the central bank maintained status quo on key rates. Besides, weak trend in European counterparts coupled with depreciation in rupee value also added pressure.

Sentiment on the street weakened as the Reserve Bank of India kept its policy repo rate unchanged at 7.75 percent on Tuesday. On the macro-economic front, annual growth in production of the eight key core sectors declining to a three-month low of 2.4 per cent in December, compared to 6.7 per cent the previous month and four per cent in December 2013, also weighed on the sentiment. On the other hand, investors ignored the report that growth among India’s services firms picked up pace in January. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, rose to 52.4 in January from 51.1 in December. It has been above 50 level, which denotes growth. Indian services companies reported sustained growth of new business in January, extending the current sequence of expansion to nine months. Also, the headline HSBC India Composite PMI Output Index signaled further growth of private sector output in January to 53.3 from 52.9.

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 70 points and ended the day’s trade with a cut of about 33 points, below its crucial 8,750 mark. 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 one and a half percent followed CNX Media down by 1.31% and CNX Auto up by 1.20% while, CNX Metal up 2.09%, CNX Realty up 1.15% and CNX Pharma up by 0.92% remained the top gainers on NSE sectoral space.

The top gainers from the F&O segment were Wockhardt, Jain Irrigation Systems and Jaiprakash Associates. On the other hand, the top losers were Crompton Greaves, Century Textiles & Industries and JSW Energy. 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 increased by 1.22% and reached 20.05. The 50-share CNX Nifty was down by 32.85 points or 0.38% to settle at 8,723.70. Nifty February 2015 futures closed at 8776.35 on Wednesday at a premium of 52.65 points over spot closing of 8723.70, while Nifty March 2015 futures ended at 8836.60 at a premium of 112.90 points over spot closing. Nifty February futures saw contraction of 0.11 million (mn) units, taking the total outstanding open interest (OI) to 25.28 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 295.30 compared with spot closing of 292.55. The number of contracts traded were 34,226.

ICICI Bank February 2015 futures traded at a premium of 0.85 points at 346.85 compared with spot closing of 346.00. The number of contracts traded were 21,697.

HDFC Bank February 2015 futures traded at a premium of 11.95 points at 1073.65 compared with spot closing of 1061.70. The number of contracts traded were 27,336.

Reliance Industries February 2015 futures traded at a premium of 9.00 points at 935.70 compared with spot closing of 926.70. The number of contracts traded were 21,547.

Axis Bank February 2015 futures traded at a premium of 0.65 points at 561.15 compared with spot closing of 560.50. The number of contracts traded were 56,483.

Among Nifty calls, 9000 SP from the February month expiry was the most active call with a contraction of 0.11 million open interests. Among Nifty puts, 8,700 SP from the February month expiry was the most active put with an addition of 0.28 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.37 mn) and that for Puts was at 8,500 SP (2.98 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8776.23--- Pivot Point 8740.32--- Support --- 8687.78.

The Nifty Put Call Ratio (PCR) finally stood at 0.86 for February month contract. The top five scrips with highest PCR on OI were Bata India (2.87), Grasim (1.21), SSLT (1.13), L&T (1.11) and IndusInd Bank (1.07). 

Among most active underlying, Wockhardt witnessed an addition of 0.47 million of Open Interest in the February month futures contract, followed by Axis Bank witnessing an addition of 0.37 million of Open Interest in the February month contract; Canara Bank witnessed an addition of 0.95 million of Open Interest in the February month contract, State Bank of India witnessed an addition of 2.32 million of Open Interest in the February month contract and ICICI Bank witnessed an addition of 3.50 million of Open Interest in the February month's future contract.