Nifty slumps for fifth straight session in volatile trade

The fifty stock index -- Nifty -- continued its southward journey for fifth consecutive day on Thursday and finished the volatile session of trade with a cut of over one tenth of a percent weighed down by weakness in the global equity markets. Sentiments were undermined after Greece’s efforts to renegotiate its bailout suffered a serious setback on Wednesday when the European Central Bank shut off a major source of lending for the country’s troubled financial institutions. The central bank decided that it would no longer accept Greek government bonds as collateral for loans, saying that it was not confident the country could meet its bailout requirements. However, trade found some support from Reserve Bank of India Governor, Raghuram Rajan’s statement that India should not settle for anything less than double-digit economic growth in the medium term after making substantial progress in securing its macroeconomic fundamentals since late 2013. Meanwhile, banking shares, mainly the PSU banks, once again witnessed strong selling pressure after IOB and UCO Bank disappointed on the earnings front. However, losses were limited as technology stocks advanced after Cognizant Technologies forecast a pick-up in annual revenue growth, while a strong response to HDFC Bank's $1.6 billion share offering also supported sentiment.

After cautious opening, nifty showed some strength in early afternoon trades, but the sentiments turned pessimistic in final hour of trade and the index drifted lower, lacking any significant upside cues. Last minute short covering ensured the key index does not shut shop way below the neutral line, closing the session above its crucial 8,700 level. Most of the sectoral indices on the NSE settled in the negative territory with CNX Realty losing the most, ending with a loss of over two and a half percent followed CNX PSU Bank down by 2.06% and CNX Metal up by 1.92% while, CNX IT up 1.90% and CNX FMCG up by 0.49% remained the only gainers on NSE sectoral space.

The top gainers from the F&O segment were Jubilant Foodworks, HCL Tech and BPCL. On the other hand, the top losers were Unitech, IOB and GMR Infrastructure. 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. 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 2.82% and reached 20.61. The 50-share CNX Nifty was down by 12 points or 0.14% to settle at 8,711.70. Nifty February 2015 futures closed at 8751.30 on Thursday at a premium of 39.60 points over spot closing of 8711.70, while Nifty March 2015 futures ended at 8810.30 at a premium of 98.60 points over spot closing. Nifty February futures saw contraction of 0.44 million (mn) units, taking the total outstanding open interest (OI) to 24.83 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 1.85 points at 292.35 compared with spot closing of 290.50. The number of contracts traded were 31,798.

ICICI Bank February 2015 futures traded at a premium of 2.70 points at 337.85 compared with spot closing of 335.15. The number of contracts traded were 29,460.

HDFC Bank February 2015 futures traded at a premium of 6.75 points at 1082.15 compared with spot closing of 1075.40. The number of contracts traded were 35,423.

Reliance Industries February 2015 futures traded at a premium of 7.00 points at 928.60 compared with spot closing of 921.60. The number of contracts traded were 22,260.

Axis Bank February 2015 futures traded at a discount of 3.30 points at 564.70 compared with spot closing of 568.00. The number of contracts traded were 36,224.

Among Nifty calls, 9000 SP from the February month expiry was the most active call with a contraction of 0.29 million open interests. Among Nifty puts, 8,600 SP from the February month expiry was the most active put with an addition of 0.15 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.08 mn) and that for Puts was at 8,500 SP (2.97 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8805.55--- Pivot Point 8744.60--- Support --- 8650.75.

The Nifty Put Call Ratio (PCR) finally stood at 0.91 for February month contract. The top five scrips with highest PCR on OI were Bata India (3.13), HCL Tech (1.25), Grasim (1.16), SSLT (1.15) and L&T (1.10). 

Among most active underlying, ICICI Bank witnessed an addition of 1.64 million of Open Interest in the February month futures contract, followed by State Bank of India witnessing a contraction of 2.16 million of Open Interest in the February month contract; Tata Motors witnessed an addition of 0.74 million of Open Interest in the February month contract, Axis Bank witnessed a contraction of 1.45 million of Open Interest in the February month contract and Infosys witnessed an addition of 0.16 million of Open Interest in the February month's future contract.