Nifty prolongs downtrend for third consecutive session

The fifty stock index -- Nifty -- continued its southward journey for third consecutive day on Friday and finished the volatile session of trade with a cut of over half a percent. Sentiments remained downbeat for most part of the day as investors took cautious approach ahead of the release of the government’s market borrowing calendar for April-September. However, losses remained capped as Rajya Sabha approved the contentious key reform-driven mining Bill, which seeks to encourage exploration and production with 50-year lease terms and secure tenures, besides allowing transfer of leases and other rights. On the global front, most of the Asian markets ended in red, although European markets made positive opening, helped by gains in the construction sector after Holcim and Lafarge agreed to new merger terms.

Back home, the Indian equity benchmark made a negative start on absence of positive triggers which could have taken the markets higher and sustained selling in frontline line blue-chip stocks. Besides, depreciation in Indian rupee too weighed down sentiments.  However, investors find some support with Reserve Bank of India (RBI) Governor Raghuram Rajan statement that India is ready to deal with any foreign fund outflows as a result from the rate hike.  Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1,428.72 crore on March 19, 2015.  In the first half of trade, market traded in red as blue-chips such as ICICI Bank declined on worries that stocks have gone ahead of underlying anaemic earnings growth. Further, the losses also came on the back of participants slashing their position into equities ahead of the volatile F&O expiry week. Market continued its weak trade till the end on the back of selling in realty, Power, FMCG and Consumer Durables stocks. Finally, Nifty ended the session with a loss of 63 points.  

The top gainers from the F&O segment were Jubilant Foodworks, IRB Infrastructure Developers and Wipro. On the other hand, the top losers were Housing Development and Infrastructure, Strides Arcolab and Unitech. In the index options segment, maximum OI continues to be seen in the 9000-8900 calls and 8500-8400 puts indicating the expected trading range. In today's session, some traders exited from 8700, 8800 and 8900 puts on the back of profit booking. On the other hand, 8600, 8700 and 8900 calls strikes saw addition of 8.30, 6.38 and 1.78 lakh shares, respectively. Meanwhile, the India VIX - the gauge of underlying volatility in the market - has declined for second consecutive day as traders turned cautious ahead of the F&O expiry next week.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 6.17% and reached 14.26. The 50-share CNX Nifty was down by 63.75 points or 0.74% to settle at 8,570.90. Nifty March 2015 futures closed at 8602.05 on Friday at a premium of 31.15 points over spot closing of 8570.90, while Nifty April 2015 futures ended at 8671.05 at a premium of 100.15 points over spot closing. Nifty March futures saw contraction of 0.20 million (mn) units, taking the total outstanding open interest (OI) to 22.89 million (mn) units. The near month derivatives contract will expire on March 26, 2015.

From the most active contracts, State Bank of India March 2015 futures traded at a premium of 1.15 points at 279.00 compared with spot closing of 277.85. The number of contracts traded were 22,854.

ICICI Bank March 2015 futures traded at a premium of 0.70 points at 320.05 compared with spot closing of 319.35. The number of contracts traded were 26,821.

HDFC Bank March 2015 futures traded at a premium of 5.60 points at 1062.50 compared with spot closing of 1056.90. The number of contracts traded were 30,335.

Axis Bank March 2015 futures traded at a discount of 1.05 points at 559.05 compared with spot closing of 560.10. The number of contracts traded were 41,411.

Tata Steel March 2015 futures traded at a premium of 1.70 points at 329.95 compared with spot closing of 328.25. The number of contracts traded were 28,544.

Among Nifty calls, 8700 SP from the March month expiry was the most active call with an addition of 0.43 million open interests. Among Nifty puts, 8600 SP from the March month expiry was the most active put with a contraction of 0.25 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.03 mn) and that for Puts was at 8,500 SP (5.25 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8614.87 --- Pivot Point 8583.93 --- Support --- 8539.97.

The Nifty Put Call Ratio (PCR) finally stood at 0.86 for March month contract. The top five scrips with highest PCR on OI were Bharti Airtel (0.94), Ranbaxy (0.92), Sun Pharma (0.88), DLF (0.87) and Just Dial (0.84). 

Among most active underlying, Axis Bank witnessed a contraction of 1.24 million of Open Interest in the March month futures contract, followed by ICICI Bank witnessing an addition of 1.68 million of Open Interest in the March month contract; State Bank of India witnessed a contraction of 1.91 million of Open Interest in the March month contract, Aurobindo Pharma witnessed a contraction of 1.47 million of Open Interest in the March month contract and Yes Bank witnessed a contraction of 0.05 million of Open Interest in the March month's future contract.