Nifty end lower on caution over key reforms; holds 8,600 mark

The fifty stock index -- Nifty -- ended marginally lower on Monday as investors shunned blue chips a day ahead of the monsoon session of parliament where key reforms such as land acquisition bill are expected to be presented. Besides, profit booking was seen by investors especially in stocks that had surged last week.  On the global front, European stocks headed for a ninth consecutive session of gains Monday, fueled by investors' growing confidence that Greece has avoided an exit from the currency bloc. Further, Asian markets closed mostly in red as investors looked ahead to higher interest rates from the Federal Reserve.

After getting positive start, the Indian index nifty dropped into the red terrain sooner than later, lacking any significant upside cues. Sentiments remained subdued on expectation that uncertainty over monsoon, the Index of industrial Production (IIP) for May and the retail inflation data for June might push the Reserve Bank of India (RBI) to keep the interest rates unchanged in its next bi-monthly policy review meeting in August. Apart from that, a cautious stance by participants ahead of the quarterly earnings by several bluechip companies including Infosys and RIL, to be released this week, influenced sentiments. The indices moved only sideways thereafter but touched intraday lows in the early afternoon session. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses go home with relatively small losses. Investors find some support from report that foreign portfolio investors (FPIs) bought shares worth a net Rs 605.56 crore on July 17, 2015. Overseas investors have poured in a net amount of about USD one billion (Rs 6,500 crore) in the Indian capital markets so far this month, helped by positive global cues and easing of foreign investment norms. Traders were seen piling position in Oil & Gas, Consumer Durables and Teck sector stocks while selling was witnessed in Realty, Metal and PSU sector stocks.

The top gainers from the F&O segment were CESC, Dish TV India and UltraTech Cement. On the other hand, the top losers were Karnataka Bank, Federal Bank and DLF. In the index options segment, maximum OI was being seen in the 8600-8800 calls and 8300-8500 puts. In today's session, while the traders preferred to exit 8300 put, heavy buildup was seen in the 8500 put. On the other hand, traders exited from 8500 Call, while 8800 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.06% and reached 14.96. The 50-share CNX Nifty was down by 6.40 points or 0.07% to settle at 8,603.45. Nifty July 2015 futures closed at 8628.25 on Monday at a premium of 24.80 points over spot closing of 8,603.45, while Nifty August 2015 futures ended at 8665.80 at a primium of 62.35 points over spot closing. Nifty July futures saw addition of 0.22 million (mn) units, taking the total outstanding open interest (OI) to 21.41 million (mn) units. The near month derivatives contract will expire on July 30, 2015.

From the most active contracts, ICICI Bank July 2015 futures traded at premium of 0.95 points at 316.55 compared with spot closing of 315.60. The number of contracts traded were 16,538.

Tata Motors July 2015 futures traded at a premium of 1.35 points at 391.90 compared with spot closing of 390.55. The number of contracts traded were 22,562.

Reliance July 2015 futures traded at a premium of 4.05 points at 1029.00 compared with spot closing of 1024.95. The number of contracts traded were 16,600.

HDFC Bank July 2015 futures traded at a discount of 4.65 points at 1119.65 compared with spot closing of 1,115.00. The number of contracts traded were 16,971.

Axis Bank July 2015 futures traded at a premium of 2.00 points at 601.85 compared with spot closing of 599.85. The number of contracts traded were 21,245.

Among Nifty calls, 8600 SP from the July month expiry was the most active call with an addition of 0.29 million open interests.  Among Nifty puts, 8500 SP from the July month expiry was the most active put with an addition of 0.31 million open interests.  The maximum OI outstanding for Calls was at 8800 SP (4.50 mn) and that for Puts was at 8500 SP (6.92 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8632.03--- Pivot Point 8595.52--- Support --- 8566.93.

The Nifty Put Call Ratio (PCR) finally stood at 1.58 for July month contract.  The top five scrips with highest PCR on OI were Bosch (2.75), Aurobindo Pharma (2.01), Dr. Reddys Laboratories (1.63), Ultratech Cement (1.45) and BHEL (1.33). 

Among most active underlying, Infosys witnessed an addition of 0.49 million of Open Interest in the July month futures contract, followed by UltraTech Cement witnessing a contraction of 0.26 million of Open Interest in the July month contract; Axis Bank witnessed an addition of 0.18 million of Open Interest in the July month contract, State Bank of India witnessed an addition of 0.14 million of Open Interest in the July month contract and Reliance Industries witnessed an addition of 0.44 million units of Open Interest in the July month's future contract.