Nifty makes biggest one day fall in five months, Sheds 227 Points

Bears hammered bulls throughout the session giving bulls no chance to pounce back, taking full control over the market, bears dragged Nifty below its crucial 8,100 mark. The index fell to its lowest close so far this year, hit by strong selling on algorithmic trading platforms, while continued offloading by foreign investors amid retrospective tax worries. Besides, geo-political developments emerging from the Middle-East also dampened sentiment. On the global front, Asian markets closed mostly in red as fresh signs of weakness in the U.S. economy and worries about surging oil prices sapped investors’ appetite for risk. Investors were also spooked by a sudden spike in sovereign bond yields and lingering uncertainty surrounding Greece’s fate in the euro zone. However, European markets rebounded from Tuesday's selloff thanks to better-than-expected data and some strong corporate earnings.

Back home, the index got off to a somber opening, extending its downtrend for the second straight session on sustained selling by funds and retail investors amid a weak global trend. The market has turned jittery with the surge in international crude oil prices which has potential impact on India's fiscal deficit, current account deficit and fuel price inflation. There was fears of supply disruptions from Libya after a key port in the North African nation was shut down, taking the crude prices to their highest level in last one year. Although, nifty traded in a small range near its crucial 8,150 mark till early afternoon trades, but the selling pressure accentuated in the late afternoon as investors took to across the board selling after somber macro-economic data. HSBC Services Purchasing Managers' Index, compiled by Markit, fell to a three-month low of 52.4 in April from March's 53.0. Market participants also remained cautious about some important legislation like GST and Land bill getting blocked in the parliament’s upper house where the government lacks majority. The selling was brutal and the index closed with a loss of 227.80 points, dragging it below the crucial 8,100 level. All the sectoral indices on the NSE settled in the negative territory with CNX Realty losing the most, ending with a loss of over four percent followed by CNX PSU Bank down by 3.30% and CNX Metal down by 3.19%.

Meanwhile, India VIX - the gauge of underlying volatility in the market – was up over 13% in Wednesday’s trade, to its highest level since February, indicating more swings in the market in days to come.  In the index options segment, maximum OI continues to be seen in the 8600-8500 calls and 8000-8100 puts indicating the expected trading range. In today's session, the 8200, 8300 and 8500 CALL strikes saw addition of 13.57, 17.70 and 13.68 lakh shares, respectively. On the other hand, 8000, 7900 and 7800 PUT strikes saw an addition of 11.41, 10.04 and 4.32 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 13.27% and reached 19.67. The 50-share CNX Nifty was down by 227.80 points or 2.74% to settle at 8,097.  Nifty May 2015 futures closed at 8121.75 on Wednesday at a premium of 24.75 points over spot closing of 8,097.00, while Nifty June 2015 futures ended at 8153.75 at a premium of 56.75 points over spot closing. Nifty May futures saw contraction of 0.33 million (mn) units, taking the total outstanding open interest (OI) to 16.45 million (mn) units. The near month derivatives contract will expire on May 28, 2015.

From the most active contracts, State Bank of India May 2015 futures traded at a discount of 0.90 points at 265.00 compared with spot closing of 265.90. The number of contracts traded were 26,729.

ICICI Bank May 2015 futures traded at a premium of 1.80 points at 313.95 compared with spot closing of 312.15. The number of contracts traded were 32,053.

HDFC Bank May 2015 futures traded at a premium of 6.05 points at 973.60 compared with spot closing of 967.55. The number of contracts traded were 30,117.

Reliance Industries May 2015 futures traded at a discount of 3.50 points at 873.50 compared with spot closing of 877.00. The number of contracts traded were 34,222.

Axis Bank May 2015 futures traded at a premium of 1.30 points at 544.30 compared with spot closing of 543.00. The number of contracts traded were 34,184.

Among Nifty calls, 8500 SP from the May month expiry was the most active call with an addition of 1.26 million open interests. Among Nifty puts, 8000 SP from the May month expiry was the most active put with an addition of 1.09 million open interests. The maximum OI outstanding for Calls was at 8600 SP (3.87 mn) and that for Puts was at 8,100 SP (3.57 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8258.30 --- Pivot Point 8170.65 --- Support --- 8009.35.

The Nifty Put Call Ratio (PCR) finally stood at 0.93 for May month contract. The top five scrips with highest PCR on OI were Rural Electrification Corporation (1.35), Sun TV (1.06), Siemens (0.93), ACC (0.91) and Hindalco (0.86). 

Among most active underlying, ICICI Bank witnessed a contraction of 2.04 million of Open Interest in the May month futures contract, followed by Axis Bank witnessing a contraction of 2.48 million of Open Interest in the May month contract; Kotak Mahindra Bank witnessed a contraction of 0.26 million of Open Interest in the May month contract, Reliance Industries witnessed a contraction of 1.46 million of Open Interest in the May month contract and State Bank of India witnessed a contraction of 0.65 million of Open Interest in the May month's future contract.