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 a percentage point. Sentiments remained downbeat for most part of the day as Investment bank UBS reduced its target for Nifty to 9,200 from 9,600 saying growth recovery is slower than expected and is playing out in quarterly corporate results. On the global front, Asian shares saw a mixed end to the week after a lacklustre lead from Wall Street, following disappointing US economic data. Moreover, European stocks slipped in early trades due to Greece’s worsening financial predicament, while euro zone government borrowing costs, including Ireland’s, fell to new lows.

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. In the first half of trade, market traded in red as shares of IT exporters declined on concerns over fourth quarter results after bellwether Tata Consultancy Services’ (TCS) results failed to cheer investors. Profit booking was not only limited to the IT and tech sector stocks but rate sensitives like banking and auto along with defensive healthcare too were trading in red. Further, the losses also came as global rating agency Standard and Poor's stated that a policy logjam and “red tape” have hindered investments in India. Thereafter, nifty traded in a small range near its crucial 8,650 mark till early afternoon trades, but the selling pressure accentuated in the late afternoon as investors took to across the board selling after weak opening in European counterparts. Market participants also remained cautious on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 214 crore on April 16, 2015. The selling was brutal and the index closed with a loss of 100.70 points, dragging it below the crucial 8,650 level. Traders were seen piling positions in Metal and PSU stocks, while selling was witnessed in information technology (IT), Consumer Durables and bank sector stocks.

The top gainers from the F&O segment were IDBI Bank, Motherson Sumi Systems and Sesa Sterlite. On the other hand, the top losers were Bharat Forge, MindTree and Century Textiles & Industries. In the index options segment, maximum OI continues to be seen in the 9000-8800 calls and 8600-8500 puts indicating the expected trading range. In today's session, the 8700, 8800 and 8900 Call strikes saw addition of 13.12, 7.86 and 1.55 lakh shares, respectively. On the other hand, 8600, 8500 and 8300 Put strikes saw addition of 1.92, 5.31 and 1.98 lakh shares, respectively on the back of profit booking.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.60% and reached 15.04. The 50-share CNX Nifty was down by 100.70 points or 1.16 % to settle at 8,606.00. Nifty April 2015 futures closed at 8638.85 on Friday at a premium of 32.85 points over spot closing of 8,606.00, while Nifty May 2015 futures ended at 8690.15 at a premium of 84.15 points over spot closing. Nifty April futures saw an addition of 1.13 million (mn) units, taking the total outstanding open interest (OI) to 20.48 million (mn) units. The near month derivatives contract will expire on April 30, 2015.

From the most active contracts, Tata Consultancy Services April 2015 futures traded at a premium of 13.65 points at 2487.55 compared with spot closing of 2,473.90. The number of contracts traded were 47,551.

Reliance Industries April 2015 futures traded at a premium of 5.30 points at 929.4 compared with spot closing of 924.10. The number of contracts traded were 41,884.

Aurobindo Pharma April 2015 futures traded at a premium of 3.70 points at 1336.2 compared with spot closing of 1,332.50. The number of contracts traded were 28,108.

Lupin April 2015 futures traded at a premium of 0.40 points at 1776.4 compared with spot closing of 1,776.00. The number of contracts traded were 21,046.

State Bank of India April 2015 futures traded at a discount of 4.55 points at 291.95 compared with spot closing of 292.50. The number of contracts traded were 23,805.

Among Nifty calls, 8800 SP from the April month expiry was the most active call with an addition of 0.78 million open interests. Among Nifty puts, 8600 SP from the April month expiry was the most active put with a contraction of 0.19 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.61 mn) and that for Puts was at 8,500 SP (4.94 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8671.66 --- Pivot Point 8634.18 --- Support --- 8568.51.

The Nifty Put Call Ratio (PCR) finally stood at 1.03 for April month contract. The top five scrips with highest PCR on OI were Cairn (1.45), Allahabad Bank (1.14), Dr. Reddy's Laboratories (1.02), HDIL (1.01) and MRF (1). 

Among most active underlying, Tata Consultancy Services witnessed an addition of 0.47 million of Open Interest in the April month futures contract, followed by Reliance Industries witnessing an addition of 0.38 million of Open Interest in the April month contract; Aurobindo Pharma witnessed a contraction of 0.80 million of Open Interest in the April month contract, State Bank of India witnessed a contraction of 0.21 million of Open Interest in the April month contract and Axis Bank witnessed an addition of 0.27 million of Open Interest in the April month's future contract.