Nifty starts F&O expiry week on a disastrous note; ends below 8400 mark

Nifty ended first day of May F&O expiry week on a rough note as the index fell over a percent, dragged down by subdued cues from the global front, along with intense selling pressure among FMCG and metal shares. On the global front, Asian markets closed mostly in green on Monday as weaker yen and encouraging trade figures underpinned investor sentiment in Japan and higher iron ore prices boosted resource stocks in Australia, while Chinese shares rallied for a fifth straight day after Beijing invited private players to boost infrastructure investment and help stabilize growth. However, European markets edged lower in early trade after a Greek official said the country may be unable to make a 300 million euro repayment to the International Monetary Fund on June 5 unless there is a deal with creditors.

Back home, the Indian equity benchmark made a negative start on absence of any positive triggers which could have taken the markets higher and sustained selling in frontline line blue-chip stocks. The risk-appetite has failed to revive as traders remained cautious about the probable rate hike in the US by year end. Federal Reserve Chair Janet Yellen indicated on Friday the U.S. central bank was poised to raise interest rates this year if the world's top economy improved as expected. Furthermore, Finance Minister Arun Jaitley’s statement that inflation in India has been brought under control in the past one year but global economy and agrarian situation as well as domestic investments pose challenge to the Indian economy. Although, nifty traded in a small range near its crucial 8,420 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. Besides, profit-booking and lower-than-expected Q4 earnings by some companies too weighed on the domestic sentiment. The impending derivatives expiry for May series contracts on Thursday remained a drag on the markets. The selling was brutal and the index closed with a loss of 88 points, dragging it below the crucial 8,400 level.  Apart from CNX Media, all other NSE sectoral indices ended in the red. Among them, FMCG index fell the most by 1.99 per cent, followed by CNX Metal 1.71 percent, CNX Finance 1.07 per cent and CNX PSU Bank 0.98 per cent, while CNX Media index was up by just 0.07 percent.

The top gainers from the F&O segment were Dish TV India, Eicher Motors and UPL. On the other hand, the top losers were Tech Mahindra, Canara Bank and Ambuja Cements. In the index options segment, maximum OI is being seen in the 8500-8600 calls and 8100-8300 puts. In today's session, while the traders preferred to exit 8200 put, heavy buildup was seen in the 8400 put. On the other hand, traders exited from 8300 Call, while 8500 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 0.09% and reached 16.93. The 50-share CNX Nifty was down by 88.70 points or 1.05% to settle at 8,370.25. Nifty May 2015 futures closed at 8368.45 on Monday at a discount of 1.80 points over spot closing of 8,370.25, while Nifty June 2015 futures ended at 8,389.30 at a premium of 19.05 points over spot closing. Nifty May futures saw contraction of 0.95 million (mn) units, taking the total outstanding open interest (OI) to 11.91 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 2.50 points at 274.70 compared with spot closing of 277.20. The number of contracts traded were 44,092.

ITC May 2015 futures traded at a premium of 0.95 points at 317.45 compared with spot closing of 316.50. The number of contracts traded were 25,205.

HDFC Bank May 2015 futures traded at a discount of 2.55 points at 1022.05 compared with spot closing of 1024.60. The number of contracts traded were 41,889.

Reliance Industries May 2015 futures traded at a premium of 1.85 points at 894.95 compared with spot closing of 893.10. The number of contracts traded were 36,594.

Axis Bank May 2015 futures traded at a discount of 0.75 points at 561.20 compared with spot closing of 561.95. The number of contracts traded were 26,382.

Among Nifty calls, 8500 SP from the May month expiry was the most active call with a contraction of 1.23 million open interests. Among Nifty puts, 8400 SP from the May month expiry was the most active put with a contraction of 1.93 million open interests. The maximum OI outstanding for Calls was at 8500 SP (6.22 mn) and that for Puts was at 8,300 SP (5.24 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8420.08--- Pivot Point 8392.12--- Support --- 8342.28.

The Nifty Put Call Ratio (PCR) finally stood at 1.26 for May month contract. The top five scrips with highest PCR on OI were Bajaj-Auto (2.96), Eicher Motors (1.79), Voltas (1.77), Adani Enterprises (1.68) and Hero MotoCorp (1.66). 

Among most active underlying, State Bank of India witnessed a contraction of 5.68 million of Open Interest in the May month futures contract, followed by HDFC Bank witnessing a contraction of 6.30 million of Open Interest in the May month contract; ITC Industries witnessed a contraction of 3.24 million of Open Interest in the May month contract, Reliance Industries witnessed a contraction of 5.01 million of Open Interest in the May month contract and Canara Bank witnessed an addition of 0.51 million of Open Interest in the May month's future contract.