Nifty skids lower for second day in a row; ends below 8550 level

The fifty stock index -- Nifty -- continued its southward journey for second consecutive day on Friday and finished the choppy day of trade with cut of over half a percent as investors turned cautious with a private poll report stating that India's economic prospects have dimmed since April due to the government's inability to pass much-needed reforms. Besides, weak trend in other Asian markets coupled with depreciation in rupee value against the dollar also weighed on the sentiment. On the global front, most of the Asian markets ended in the negative terrain as manufacturing activity in China crumbled to 15-month lows, rekindling concerns for the region's exports as the world's second-largest economy struggles to arrest a broad downturn.  However, European stocks were higher in early trade, supported by some positive earnings reports and despite the release of disappointing manufacturing activity reports from the euro zone.

Back home, after getting a cautious start, nifty traded in tight range below its neutral line for most part of the day, but selling pressure was accelerated in late afternoon trade as investors turned cautious on tepid quarterly earnings coupled with lack of progress in the passage of key reforms in the Monsoon session of Parliament. Besides, fears of interest rate hike by the Fed on strong US jobs data amid weakness among the global peers too dampened the sentiments. Rate sensitive stocks weakened ahead of the RBI monetary policy as the insufficient monsoon and rise in inflation has dampened the possibility of a rate cut. According to India Meteorological Department (IMD) data, the shortfall in rains during the week ended July 8 was 50%, while the deficit was 12% for the July 16-22 week. Moreover, metal shares have declined after the flash Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) dropped to 48.2, below economists' estimate for a reading of 49.7 and the lowest reading since April last year. However, gains in FMCG and Consumer Durables stocks on hopes that GST Bill would be passed in the current monsoon session of parliament, have restrained the market losses. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 185.42 crore on July 24, 2015.

The top gainers from the F&O segment were Indiabulls Real Estate, Dewan Housing Finance Corporation and IDFC. On the other hand, the top losers were Jaiprakash Associates, Crompton Greaves and TVS Motor Company. 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 7800 put, heavy buildup was seen in the 8350 put. On the other hand, traders exited from 8900 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 0.40% and reached 15.45. The 50-share CNX Nifty was down by 68.25 points or 0.79% to settle at 8,521.55.

Nifty July 2015 futures closed at 8534.35 on Friday at a premium of 12.80 points over spot closing of 8,521.55, while Nifty August 2015 futures ended at 8576.50 at a premium of 54.95 points over spot closing. Nifty July futures saw contraction of 0.71 million (mn) units, taking the total outstanding open interest (OI) to 19.96 million (mn) units. The near month derivatives contract will expire on July 30, 2015.

From the most active contracts, IDFC July 2015 futures traded at premium of 0.50 points at 157.60 compared with spot closing of 157.10. The number of contracts traded were 30,949.

SBI Bank July 2015 futures traded at a discount of 0.25 points at 263.45 compared with spot closing of 263.70. The number of contracts traded were 20,500.

ICICI Bank July 2015 futures were trading flat compared with spot closing of 301.40. The number of contracts traded were 30,748.

Tata Motors July 2015 futures traded at a premium of 1.35 points at 391.00 compared with spot closing of 389.65. The number of contracts traded were 35,229.

Reliance July 2015 futures traded at a discount of 1.15 points at 1027.85 compared with spot closing of 1,029.00. The number of contracts traded were 33,750.

Among Nifty calls, 8600 SP from the July month expiry was the most active call with an addition of 1.22 million open interests.  Among Nifty puts, 8500 SP from the July month expiry was the most active put with a contraction of 0.59 million open interests.  The maximum OI outstanding for Calls was at 8600 SP (5.31 mn) and that for Puts was at 8500 SP (5.59 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8569.30 --- Pivot Point 8541.40 --- Support --- 8493.65.

The Nifty Put Call Ratio (PCR) finally stood at 1.28 for July month contract.  The top five scrips with highest PCR on OI were Dr. Reddys Laboratories (1.52), IndusInd Bank (1.30), Hindustan Petroleum Corporation (1.29), Grasim (1.28) and BHEL (1.18). 

Among most active underlying, Axis Bank witnessed an addition of 0.89 million of Open Interest in the July month futures contract, followed by Reliance Industries witnessing a contraction of 0.61 million of Open Interest in the July month contract; IDFC witnessed an addition of 0.41 million of Open Interest in the July month contract, ICICI Bank witnessed a contraction of 1.27 million of Open Interest in the July month contract and Lupin witnessed a contraction of 0.22 million units of Open Interest in the July month's future contract.