Nifty ends flat with negative bias; holds above 8,400 mark

The local benchmark, Nifty consolidated and ended the choppy day of trade on a flat note on Thursday. Sentiment has improved over the last week as the index has recouped much of the losses suffered earlier this month. However, foreign funds have not been big buyers in the recent rally, and that is causing many to doubt its durability. Also, the mood in corporate India is pretty much bleak one year into the NDA government, with the investment cycle yet to show signs of revival. Meanwhile, Investors are keenly waiting the June 2 monetary policy review by the RBI, which is widely expected to ease lending rates in the backdrop of weak factory output growth and a benign inflation scenario. On the global front, Asian shares ended mixed on Thursday in light of subdued cues from Wall Street and downbeat data out of China. However, Investors took weak Chinese data into their stride as signs of continued weakness in the world’s second-largest economy only served to boost expectations of more stimulus. Further, European markets opened lower as disappointing German purchasing manager data (PMI) offset an improvement in France.

Back home, after getting a cautious but positive start, the index drifted into the negative zone in early morning trades and slipped to intraday lows in mid morning session as funds and retail investors indulged in booking profits at prevailing levels. Besides, a weakening trend on the other Asian markets following overnight losses on the US bourses also triggered selling on the domestic index. However, the psychological 8,400 levels proved as strong support levels for the key gauges as the benchmark soon recovered from the lows. Traders got some encouragement with Reserve Bank of India Governor Raghuram Rajan’s statement that government has taken steps to propel growth. He also said that investors’ unhappiness over the taxation issues could have been avoided, but once raised, they have to go through a legal process which is on. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 123.49 crore on May 20, 2015.Thereafter the index traded near neutral line for most part of the day’s trade, lacking any significant upside triggers as investors engaged themselves in few stocks. Eventually, the index ended the day’s trade with a marginal cut of two points, holding its crucial 8,400 mark.

The top gainers from the F&O segment were Strides Arcolab, Bajaj Auto and Amtek Auto. On the other hand, the top losers were Tata Steel, Vedanta and Apollo Tyres. In the index options segment, maximum OI is being seen in the 8500-8600 calls and 8000-8200 puts. In today's session, while the traders preferred to exit 8100 put, heavy buildup was seen in the 8200 put. On the other hand, traders exited from 8300 Call, while 8600 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.72% and reached 17.41. The 50-share CNX Nifty was down by 2.25 points or 0.03% to settle at 8,421. Nifty May 2015 futures closed at 8419.10 on Thursday at a discount of 1.90 points over spot closing of 8,421.00, while Nifty June 2015 futures ended at 8,440.60 at a premium of 19.60 points over spot closing. Nifty May futures saw contraction of 0.43 million (mn) units, taking the total outstanding open interest (OI) to 13.14 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 4.60 points at 286.90 compared with spot closing of 291.50. The number of contracts traded were 23,611.

HDFC Bank May 2015 futures traded at a premium of 2.35 points at 1025.05 compared with spot closing of 1022.70. The number of contracts traded were 29,223.

Reliance Industries May 2015 futures traded at a premium of 2.25 points at 897.85 compared with spot closing of 895.60. The number of contracts traded were 33,175.

Axis Bank May 2015 futures traded at a premium of 2.70 points at 572.25 compared with spot closing of 569.55. The number of contracts traded were 34,688.

Tata Steel May 2015 futures traded at a discount of 0.95 points at 343.05 compared with spot closing of 344.00. The number of contracts traded were 41,149.

Among Nifty calls, 8500 SP from the May month expiry was the most active call with an additional of 0.10 million open interests. Among Nifty puts, 8400 SP from the May month expiry was the most active put with an addition of 0.15 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.05 mn) and that for Puts was at 8,200 SP (6.03 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8450.73--- Pivot Point 8416.62--- Support --- 8386.88.

The Nifty Put Call Ratio (PCR) finally stood at 1.15 for May month contract. The top five scrips with highest PCR on OI were Bajaj-Auto (2.48), Hero MotoCorp (1.76), Dr. Reddy's Laboratories (1.67), UltraTech Cement (1.59) and Adani Enterprises (1.49). 

Among most active underlying, Bajaj Auto witnessed an addition of 0.24 million of Open Interest in the May month futures contract, followed by State Bank of India witnessing an addition of 3.11 million of Open Interest in the May month contract; Tata Steel witnessed an addition of 1.54 million of Open Interest in the May month contract, Reliance Industries witnessed a contraction of 2.05 million of Open Interest in the May month contract and Axis Bank witnessed an addition of 1.43 million of Open Interest in the May month's future contract.