Nifty makes triple digit losses; closes below 8,550 level

The downtrend in equity markets continued for seventh consecutive session and the benchmark witnessed another day of extreme selling pressure, breaking yet another support level lacking buying activity. Sentiment on the street weakened on fears that Aam Aadmi Party's victory in Delhi assembly elections would pave the way for populist policies in the national capital. Furthermore, discouraging third quarter earnings by some bluechip companies, weak trend in Asian stocks and depreciation in the rupee, was also dampening the trading sentiments. Meanwhile, some traders remained on the sidelines and refrained from any buying activity ahead of index of industrial production (IIP) data for December 2014 on February 12, 2015.

Earlier, the index got off to a somber opening, extending the downtrend for the seventh straight session on sustained selling by funds and retail investors amid exit polls showing that the BJP may not be able to form government in Delhi. Though, it would do little to change national political scenario but its leader Arvind Kejriwal’s rhetoric against big business is raising fear in the markets. The selling pressure accentuated in the late afternoon trades as investors took to across the board risk aversion. Furthermore, foreign funds continued to remain net sellers on domestic bourses also weighed on the sentiment and added to selling. FPIs sold shares worth Rs 96.45 crore on February 06, 2015. Eventually, the index ended the sluggish day of trade with a cut of over 130 point below its crucial 8,550 mark. All the sectoral indices on the NSE settled in the negative territory with CNX PSU Bank losing the most, ending with a loss of over three percent followed CNX Metal down by 2.65% and CNX Realty down by 2.55%.

The top gainers from the F&O segment were Sun TV, Wockhardt and Hexaware Technologies. On the other hand, the top losers were Apollo Tyre, Reliance Infrastructure and Larsen & Toubro. In the index options segment for February series, maximum OI continues to be seen in the 9000-8900 calls and 8500-8400 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 6.43% and reached 22.01. The 50-share CNX Nifty was down by 134.70 points or 1.56% to settle at 8,526.35. Nifty February 2015 futures closed at 8562.90 on Monday at a premium of 36.55 points over spot closing of 8526.35, while Nifty March 2015 futures ended at 8626.10 at a premium of 99.75 points over spot closing. Nifty February futures saw addition of 0.15 million (mn) units, taking the total outstanding open interest (OI) to 24.80 million (mn) units. The near month derivatives contract will expire on February 26, 2015.

From the most active contracts, ICICI Bank February 2015 futures traded at a premium of 2.30 points at 322.35 compared with spot closing of 320.05. The number of contracts traded were 20,021.

State Bank of India February 2015 futures traded at a premium of 1.50 points at 281.00 compared with spot closing of 279.50. The number of contracts traded were 28,567.

HDFC Bank February 2015 futures traded at a premium of 5.75 points at 1045.85 compared with spot closing of 1040.10. The number of contracts traded were 18,719.

Reliance Industries February 2015 futures traded at a premium of 4.60 points at 901.30 compared with spot closing of 896.70. The number of contracts traded were 19,733.

Axis Bank February 2015 futures traded at a discount of 1.00 points at 552.60 compared with spot closing of 553.60. The number of contracts traded were 23,087.

Among Nifty calls, 8800 SP from the February month expiry was the most active call with an addition of 0.12 million open interests. Among Nifty puts, 8,500 SP from the February month expiry was the most active put with an addition of 0.57 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.89 mn) and that for Puts was at 8,300 SP (4.07 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8582.48 --- Pivot Point 8549.42 --- Support --- 8493.28.

The Nifty Put Call Ratio (PCR) finally stood at 0.89 for February month contract. The top five scrips with highest PCR on OI were Bata India (2.16), HCL Tech (1.25), IOB (0.93), Hindalco (0.89) and Infosys (0.88). 

Among most active underlying, Larsen & Toubro witnessed an addition of 0.37 million of Open Interest in the February month futures contract, followed by State Bank of India witnessing an addition of 1.33 million of Open Interest in the February month contract; ICICI Bank witnessed an addition of 0.02 million of Open Interest in the February month contract, Apollo Tyres witnessed an addition of 1.42 million of Open Interest in the February month contract and Axis Bank witnessed a contraction of 0.02 million of Open Interest in the February month's future contract.