Nifty skids lower for second day in a row; ends below 8800 level

The fifty stock index -- Nifty -- continued its southward journey for the second day on Monday and finished the choppy day of trade with a cut of over eight tenths of percent as funds and retail investors booked profits made in recent weeks amid mixed global cues. Sentiments on the street weakened after Global rating agency Standard & Poor's said that India's low income levels and weak fiscal and debt indicators constrain the country's credit profile. The average income in India (unsolicited rating BBB-/Stable/A-3) is significantly below that of its peers and the government is also more heavily indebted. Besides, some investors remained on the sidelines and refrained from any buying activity for the key developments during the Budget session where Prime Minister Narendra Modi’s government will present its first full-year spending plan and look to pass key bills to revive the economy. Some concerns also came with report that foreign portfolio investors (FPIs) sold shares worth a net Rs 89 crore on February 20, 2015. All the sectoral indices on the NSE settled in the negative territory with CNX Media losing the most, ending with a cut of over two percent followed by CNX Realty down by 1.66% and CNX PSU Bank down by 1.78%.

After gap up opening, nifty showed some strength in morning trades, but the sentiments turned pessimistic in afternoon trades and the index drifted lower in second half as investors turned cautious and booked profits ahead of the ahead of key events including Economic Survey, Railway Budget and Union Budget along with the expiry of February series later during the week. The selling was brutal and the index closed with loss of over 75 points, dragging it well below the crucial 8,800 level. 

The top gainers from the F&O segment were Wockhardt, Adani Power and Federal Bank. On the other hand, the top losers were HDIL, IFCI and Apollo Tyres. In the index options segment for February series, maximum OI continues to be seen in the 9000-8900 calls and 8600-8500 puts indicating the expected trading range.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.71% and reached 21.63. The 50-share CNX Nifty was down by 78.65 points or 0.89% to settle at 8,754.95.

Nifty February 2015 futures closed at 8753.45 on Monday at a discount of 1.50 points over spot closing of 8754.95, while Nifty March 2015 futures ended at 8815.85 at a premium of 60.90 points over spot closing. Nifty February futures saw contraction of 6.41 million (mn) units, taking the total outstanding open interest (OI) to 16.52 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 296.85 compared with spot closing of 295.00. The number of contracts traded were 37,841.

ICICI Bank February 2015 futures traded at a premium of 1.20 points at 329.10 compared with spot closing of 327.90. The number of contracts traded were 25,508.

HDFC Bank February 2015 futures traded at a premium of 3.60 points at 1066.70 compared with spot closing of 1063.10. The number of contracts traded were 57,121.

Axis Bank February 2015 futures traded at a premium of 1.45 points at 549.70 compared with spot closing of 548.25. The number of contracts traded were 27,846.

Reliance Industries February 2015 futures traded at a premium of 3.90 points at 852.00 compared with spot closing of 848.10. The number of contracts traded were 49,125.Among Nifty calls, 8900 SP from the February month expiry was the most active call with an addition of 0.77 million open interests. Among Nifty puts, 8800 SP from the February month expiry was the most active put with a contraction of 1.17 million open interests. The maximum OI outstanding for Calls was at 9000 SP (7.89 mn) and that for Puts was at 8,700 SP (4.47 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8837.27 --- Pivot Point 8786.68 --- Support --- 8704.37.

The Nifty Put Call Ratio (PCR) finally stood at 0.85 for February month contract. The top five scrips with highest PCR on OI were Syndicate Bank (1.26), TCS (1.17), Tata Motors - DVR  (1.17), Sun TV (1.16) and HCL Tech (1.13). 

Among most active underlying, State Bank of India witnessed a contraction of 9.99 million of Open Interest in the February month futures contract, followed by HDFC Bank witnessing a contraction of 10.38 million of Open Interest in the February month contract; Reliance Industries witnessed a contraction of 7.01 million of Open Interest in the February month contract, Larsen & Toubro witnessed a contraction of 1.61 million of Open Interest in the February month contract and ICICI Bank witnessed a contraction of 1.25 million of Open Interest in the February month's future contract.