Bears hit back with a vengeance; Nifty down 2.38%

Bears struck back with a bang on Tuesday and Nifty ended the day’s trade with a fall of over 198 points breaching its crucial 8,150 level, weighed down by rate-sensitive sectors like financials, auto and real estate as macro economic data which is due to be released today is expected to be mixed, which may push the Reserve Bank (RBI) to pause rate cuts. On the global front, Asian markets closed mixed, while European markets made a negative start over the prospects for a deal on Greece's debts. On Monday, euro-zone finance ministers met in Brussels to discuss the final Euro 7.2 bn tranche of Greece's Euro 240bn EU/IMF bailout.

Earlier, the benchmark got off to a pessimistic start following the Asian peers as investors remained concerned about the developments in Greece’s bailout talks. Besides, fresh worries on retrospective taxation, upcoming monsoon and slower than expected recovery in earnings have also continued to weigh on sentiment. The market has turned jittery with worries of crucial goods and services tax (GST) and Land bill not getting through in the current session of parliament after being referred to select panel. Traders were also concerned about the depreciation in rupee past the 64 per dollar mark after the American currency firmed up overseas. Thereafter, 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 European markets made an awful start with CAC, DAX and FTSE trading with a cut of over a percent in early deals. Besides, cautiousness ahead of the release Industrial production figures for the month of March and Retail inflation data for the month of April too was keeping market-participants on the tenterhooks, adding to the pessimistic environment.  The selling was brutal and the index closed with a loss of 198 points, dragging it below the crucial 8,150 level. All the sectoral indices on the NSE settled in the negative territory with CNX PSU bank losing the most, ending with a loss of over three and half percent followed by CNX Realty down by 3.51% and CNX Metal down by 3.05%.

The top gainers from the F&O segment were Dr. Reddy's Laboratories, Hero MotoCorp and Oracle Financial Services Software. On the other hand, the top losers were UCO Bank, Housing Development and Infrastructure and Bank of Baroda. 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. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session, which shows that traders are buying more options contracts as insurance against declines in the market.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 10.31% and reached 20.54. The 50-share CNX Nifty was down by 198.30 points or 2.38% to settle at 8,126.95. Nifty May 2015 futures closed at 8131.25 on Tuesday at a premium of 4.30 points over spot closing of 8,126.95, while Nifty June 2015 futures ended at 8160.40 at a premium of 33.45 points over spot closing. Nifty May futures saw an addition of 0.43 million (mn) units, taking the total outstanding open interest (OI) to 14.09 million (mn) units. The near month derivatives contract will expire on May 28, 2015.

From the most active contracts, Ashok Leyland May 2015 futures traded at a discount of 0.20 points at 72.10 compared with spot closing of 72.30. The number of contracts traded were 27,703.

State Bank of India May 2015 futures traded at a discount of 2.75 points at 264.80 compared with spot closing of 267.55. The number of contracts traded were 24,084.

HDFC Bank May 2015 futures traded at a discount of 0.40 points at 971.60 compared with spot closing of 972.00. The number of contracts traded were 29,060.

Reliance Industries May 2015 futures traded at a discount of 0.65 points at 870.50 compared with spot closing of 871.15. The number of contracts traded were 28,575.

Axis Bank May 2015 futures traded at a premium of 3.05 points at 534.15 compared with spot closing of 531.10. The number of contracts traded were 25,962.

Among Nifty calls, 8300 SP from the May month expiry was the most active call with an addition of 1.19 million open interests. Among Nifty puts, 8000 SP from the May month expiry was the most active put with a contraction of 0.63 million open interests. The maximum OI outstanding for Calls was at 8300 SP (4.39 mn) and that for Puts was at 8,100 SP (4.73 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8263.97--- Pivot Point 8189.63--- Support --- 8052.62.

The Nifty Put Call Ratio (PCR) finally stood at 0.97 for May month contract. The top five scrips with highest PCR on OI were Hero MotoCorp (1.25), Eicher Motors (1.07), SUN TV (1.04), Bank of Baroda (1.03) and Dr. Reddys Laboratories (1.01). 

Among most active underlying, Ashok Leyland witnessed an addition of 3.61 million of Open Interest in the May month futures contract, followed by Dr. Reddy's Laboratories witnessing a contraction of 0.09 million of Open Interest in the May month contract; ICICI Bank witnessed an addition of 2.04 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 and Reliance Industries witnessed a contraction of 0.16 million of Open Interest in the May month's future contract.