Nifty prolongs downtrend for third consecutive session

The fifty stock index -- Nifty -- continued its southward journey for third consecutive day on Thursday and finished the choppy day of trade with a cut of about half a percent. Sentiments remained downbeat for most part of the day on account of the concerns pertaining to the FIIs’ taxation (MAT) issue, the nervousness surrounding the March quarter earnings season, and the possibility of a second consecutive year of weak monsoon. On the global front, Asian stocks ended in red on weaker-than-expected US economic data and a warning from Federal Reserve Chair Janet Yellen that stock valuations were 'quite high'. Furthermore, European shares fell to their lowest in more than two months, mirroring losses in Wall Street and Asia, with a stronger euro following a global bond rout and concerns about the outcome of the British election.

Back home, the Indian equity benchmark made a negative start on absence of any positive triggers which could have taken the market higher and sustained selling in frontline line blue-chip stocks. Besides, weak trend in Asian stocks coupled with depreciation in rupee value also weighed on the sentiment. Although, the key index made some attempts to claw back into the green zone in early morning trades but profit booking at higher levels dragged the key index once again below neutral line. Sentiments remained subdued on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1,699.60 crore on May 06, 2015. The index traded near neutral line for most part of the day, lacking any significant upside triggers as investors engaged themselves in few stocks. However, 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 about reform process that may get delayed as the key GST bill faces strong political opposition even as it got through Lok Sabha. Nevertheless, some value buying in dying hours helped the index to pare some of its losses, albeit end the session with a cut of 39 points. Traders were seen piling positions in IT, Teck and FMCG stocks, while sharp selling was witnessed in Banking, Realty and Infrastructure sector stocks

The top gainers from the F&O segment were HCL Technologies, Tata Consultancy Services and Sun TV Network. On the other hand, the top losers were IFCI, Wockhardt and Oriental Bank of Commerce. 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 8000, 8100 and 8200 CALL strikes saw addition of 2.14, 4.39 and 4.63 lakh shares, respectively. On the other hand, 8100, 8000 and 7800 PUT strikes saw an addition of 3.79, 2.94 and 9.74 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 0.10% and reached 19.65. The 50-share CNX Nifty was down by 39.70 points or 0.49% to settle at 8,057.30.  Nifty May 2015 futures closed at 8082.15 on Thursday at a premium of 24.85 points over spot closing of 8,057.30, while Nifty June 2015 futures ended at 8113.40 at a premium of 56.10 points over spot closing. Nifty May futures saw contraction of 1.22 million (mn) units, taking the total outstanding open interest (OI) to 15.22 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 premium of 0.10 points at 261.10 compared with spot closing of 261.00. The number of contracts traded were 26,680.

HDFC Bank May 2015 futures traded at a premium of 4.55 points at 954.55 compared with spot closing of 950.00. The number of contracts traded were 26,189.

ICICI Bank May 2015 futures traded at a premium of 2.25 points at 306.35 compared with spot closing of 304.10. The number of contracts traded were 25,618.

Reliance Industries May 2015 futures traded at a discount of 2.35 points at 864.65 compared with spot closing of 867.00. The number of contracts traded were 25,911.

Axis Bank May 2015 futures traded at a premium of 3.25 points at 529.35 compared with spot closing of 526.10. The number of contracts traded were 32,612.

Among Nifty calls, 8200 SP from the May month expiry was the most active call with an addition of 0.41 million open interests. Among Nifty puts, 8000 SP from the May month expiry was the most active put with an addition of 0.12 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.22 mn) and that for Puts was at 8,000 SP (4.38 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8120.88--- Pivot Point 8059.02--- Support --- 7995.43.

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for May month contract. The top five scrips with highest PCR on OI were ACC (0.96), Rural Electrification Corporation (0.89), SUN TV (0.89), Vedanta (0.89) and Bajaj-Auto (0.88). 

Among most active underlying, ICICI Bank witnessed a contraction of 2.58 million of Open Interest in the May month futures contract, followed by Axis Bank witnessing a contraction of 0.30 million of Open Interest in the May month contract; State Bank of India witnessed a contraction of 2.12 million of Open Interest in the May month contract, Reliance Industries witnessed a contraction of 0.19 million of Open Interest in the May month contract and Infosys witnessed a contraction of 0.17 million of Open Interest in the May month's future contract.