Nifty ends below 8,250 mark on RBI's cautious stance

Bears hammered bulls throughout the session giving them no chance to bounce back, taking full control over the market, bears dragged Nifty below its crucial 8,250 mark. The index fell over a percent, dragged down by Reserve Bank of India’s (RBI’s) cautious stance on the economic recovery even as it cut policy rates by 25 basis points. RBI governor Raghuram Rajan lowered projections of the economic growth as measured by GVA (gross value added) to 7.6% from 7.8% estimated in April due to global factors and likely impact of below normal monsoon. On the global front, Asian markets closed mostly in red as upbeat data on U.S. manufacturing activity and construction spending reignited rate hike worries ahead of the release of U.S. non-farm payroll data on Friday and the next Federal Reserve meeting scheduled for June 16-17. Furthermore, European shares edged lower in early trade, keeping within their recent range as investors awaited euro zone inflation data due later in the day and developments out of Greece's negotiations with creditors.

Back home, the Indian equity benchmark made a negative start on absence of positive triggers and on report that output in the eight key infrastructure industries declined in April for a second month in a row, by 0.4%. Besides, losses in ITC on reports stating ban of sale of loose cigarettes coupled with weakness in select auto shares with Hero Motocorp losing the most on weak May sale numbers have dragged the index further lower. Although, nifty traded in a small range near its crucial 8,300 mark till early afternoon trades, but the selling pressure accentuated in the late afternoon as investors took to across the board selling after India Meteorological Department has downgraded monsoon forecast to 88% of the long-term average as against the earlier forecast of 93%, raising fears of a drought. The selling was brutal and the index closed with a loss of 196.95 points, dragging it below the crucial 8,250 level. Barring Metal, all other NSE sectoral indices ended in the red. Among them, PSU Bank index declined the most by 4.13%, followed by Realty down by 3.98%, Bank Nifty down by 3.44% and CNX Finance down by 3.37%. On the other hand, Media index was up 0.34%.

The top gainers from the F&O segment were Zee Entertainment Enterprises, Adani Enterprises and Lupin. On the other hand, the top losers were Page Industries, Union Bank of India and Indiabulls Real Estate. In the index options segment, maximum OI is being seen in the 8800-9000 calls and 8000-8200 puts. In today's session, while the traders preferred to exit 8400 put, heavy buildup was seen in the 7900 put. On the other hand, traders exited from 9100 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 0.55% and reached 16.82. The 50-share CNX Nifty was down by 196.95 points or 2.34% to settle at 8,236.45. Nifty June 2015 futures closed at 8225.35 on Tuesday at a discount of 11.10 points over spot closing of 8,236.45, while Nifty July 2015 futures ended at 8263.35 at a premium of 26.90 points over spot closing. Nifty June futures saw an addition of 0.01 million (mn) units, taking the total outstanding open interest (OI) to 16.11 million (mn) units. The near month derivatives contract will expire on June 25, 2015.

From the most active contracts, State Bank of India June 2015 futures traded at a premium of 0.70 points at 267.20 compared with spot closing of 266.50. The number of contracts traded were 44,714.

ICICI Bank June 2015 futures traded at a discount of 2.85 points at 300.90 compared with spot closing of 303.75. The number of contracts traded were 26,014.

HDFC Bank June 2015 futures traded at a premium of 5.90 points at 1012.95 compared with spot closing of 1007.05. The number of contracts traded were 22,261.

Reliance Industries June 2015 futures traded at a premium of 3.75 points at 900.75 compared with spot closing of 897.00. The number of contracts traded were 38,686.

Axis Bank June 2015 futures traded at a premium of 2.30 points at 555.05 compared with spot closing of 552.75. The number of contracts traded were 33,544.

Among Nifty calls, 9000 SP from the June month expiry was the most active call with an addition of 4.05 million open interests. Among Nifty puts, 8000 SP from the June month expiry was the most active put with an addition of 4.25 million open interests. The maximum OI outstanding for Calls was at 8800 SP (3.71 mn) and that for Puts was at 8,000 SP (4.27 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8379.18--- Pivot Point 8302.62--- Support --- 8159.88.

The Nifty Put Call Ratio (PCR) finally stood at 1.03 for June month contract. The top five scrips with highest PCR on OI were MindTree (1.38), REC (1.30), Bajaj-Auto (1.23), BHEL (1.14) and M&M (1.04). 

Among most active underlying, Adani Enterprises witnessed an addition of 0.22 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing an addition of 2.66 million of Open Interest in the June month contract; Reliance Industries witnessed a contraction of 0.91 million of Open Interest in the June month contract, ICICI Bank witnessed an addition of 2.75 million of Open Interest in the June month contract and Larsen & Toubro witnessed an addition of 0.08 million of Open Interest in the June month's future contract.