Bearish trend continues; Nifty ends below 8,150 mark

CNX Nifty continued its steep downfall and closed lower as investors continued to pare back expectations of any additional rate cut this year after the country forecasted lower-than-expected rainfall during the monsoon season. Besides, the slow pace of recovery in the economy continued to weigh on market sentiment. On the global front, Asian markets closed mostly in red as Greece's bailout woes and a stagnant Wall Street performance dampened investor sentiment. Further, Concerns about Greece's ability to meet debt payments to its bailout creditors have weighed on markets. However, European shares held steady in early trade, with supermarket groups Ahold and Delhaize advancing after media reports suggesting merger talks between the two could come to a successful conclusion as early as June.

Back home, the index got off to a somber opening on sustained selling by funds and retail investors amid a weak global trend. Sentiment got a hit as weak monsoon forecast rekindled fears of higher inflation thereby dimming the prospects of further rate cuts by the central bank. 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. Although, agriculture minister has stated that the government  has started preparing contingency plans for 580 districts from April onwards and is ready to face the draught situation and will overcome it with the help of states. Thereafter, nifty traded in a small range near its crucial 8,200 mark in morning trades, but the selling pressure accentuated in the afternoon as investors took to across the board selling after India's services sector activity contracted for the first time in 13 months in May, largely due to decline in new order flows amid competitive pressure and natural disasters. Meanwhile, shares were also hit by market speculation that some companies, largely mid-caps, were facing repayment defaults. Jaiprakash Associates slumped 20.7%, while Unitech lost 35.7% even as both companies denied that they were facing such issues.  However, some value buying in dying hours helped the index to pare some of its losses, albeit end the session below its crucial 8,150 mark with a cut of 101 points. Barring CNX IT, all other NSE sectoral indices ended in the red. Among them, CNX Realty index declined the most by 5.99%, followed by CNX FMCG down by 2.93%, CNX PSU Bank down by 2.36% and CNX Auto down by 1.60%. On the other hand, CNX IT index was up 0.12%.

The top gainers from the F&O segment were Idea Cellular, Bajaj Finance and UPL. On the other hand, the top losers were Adani Enterprises, Unitech and Jaiprakash Associates. In the index options segment, maximum OI was being seen in the 8500-8600 calls and 8000-8200 puts. In today's session, while the traders preferred to exit 8300 put, heavy buildup was seen in the 7800 put. On the other hand, traders exited from 9000 Call, while 8300 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 4.07% and reached 17.50. The 50-share CNX Nifty was down by 101.35 points or 1.23% to settle at 8,135.10. Nifty June 2015 futures closed at 8136.35 on Wednesday at a premium of 1.25 points over spot closing of 8,135.10, while Nifty July 2015 futures ended at 8173.65 at a premium of 38.55 points over spot closing. Nifty June futures saw contraction of 0.08 million (mn) units, taking the total outstanding open interest (OI) to 16.02 million (mn) units. The near month derivatives contract will expire on June 25, 2015.

From the most active contracts, Unitech June 2015 futures traded at a premium of 0.20 points at 8.70 compared with spot closing of 8.50. The number of contracts traded were 40,392.

State Bank of India June 2015 futures traded at a premium of 0.75 points at 259.00 compared with spot closing of 258.25. The number of contracts traded were 32,124.

ICICI Bank June 2015 futures traded at a discount of 4.20 points at 292.70 compared with spot closing of 296.90. The number of contracts traded were 27,548.

Reliance Industries June 2015 futures traded at a premium of 3.10 points at 898.10 compared with spot closing of 895.00. The number of contracts traded were 26,275.

Sun Pharma Industries June 2015 futures traded at a premium of 3.25 points at 844.30 compared with spot closing of 841.05. The number of contracts traded were 26,697.

Among Nifty calls, 8300 SP from the June month expiry was the most active call with an addition of 1.26 million open interests. Among Nifty puts, 8000 SP from the June month expiry was the most active put with an addition of 0.28 million open interests. The maximum OI outstanding for Calls was at 8800 SP (3.94 mn) and that for Puts was at 8,000 SP (4.53 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8216.48--- Pivot Point 8155.32--- Support --- 8073.93.

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 (1.25), Bata India (1.03), VEDL (1.03) and BHEL (1.03). 

Among most active underlying, State Bank of India witnessed an addition of 3.98 million of Open Interest in the June month futures contract, followed by ICICI Bank witnessing an addition of 5.59 million of Open Interest in the June month contract; Adani Ports and Special Economic Zone witnessed an addition of 2.76 million of Open Interest in the June month contract, Reliance Industries witnessed a contraction of 0.75 million of Open Interest in the June month contract and Axis Bank witnessed an addition of 0.81 million of Open Interest in the June month's future contract.