Nifty makes triple digit losses; close below 8,400 level

The fifty stock index -- Nifty -- witnessed drubbing for yet another session on Monday and ended with massive cut of around two percent which dragged the index below its psychologically crucial 8,400 level on broad-based selling pressure in absence of any positive trigger which could otherwise lift the markets higher. The market sentiment was hurt by fears that the government may accept the Supreme Court-appointed special investigation team's proposal to tighten rules on participatory notes. On the global front, Asian stocks ended lower after Chinese shares recorded their single-biggest drop in over 5 years to end over 8% lower on Monday as investors booked profits while the sluggish economy also weighed on investor sentiment. Further, European markets opened lower tracking the sharp sell-off in Chinese stocks and investors turned cautious ahead of the US Fed meet this week.

Back home, the benchmark got off to a somber opening, extending the downtrend for the third straight session as investors turned cautious on reports that market regulator Sebi may review the participatory notes (P-Notes) norms and Government’s move on the above to restrain black money coupled with the issue of levying MAT on FPIs. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The selling pressure accentuated in the mid afternoon trades as investors took to across the board risk aversion. Sentiments were also hit following a sell-off in other Asian markets with over 8 per cent crash in Shanghai on worries that the Chinese economy, the world’s second largest, is heading for a sharp slowdown. Investors even neglected the Finance Minister Arun Jaitley statement that the government will not take any ‘knee-jerk’ reaction that will adversely impact country’s investment climate. Besides, muted earnings from large corporates, reforms uncertainty amid political logjam, expiry of July derivative contracts, the outcome of the US Fed meet on July 28-29 also weighed on investor sentiment. Eventually, Nifty ended below its crucial 8,400 mark with a massive cut of 1.88 percent. Barring Media, all the other sectoral indices on the NSE settled in the negative territory with CNX Energy losing the most, ending with a loss of about two and half percent followed by CNX Metal down by 2.27% and CNX PSU Bank down by 2.25%.

The top gainers from the F&O segment were Sun TV Network, Indiabulls Housing Finance and Tech Mahindra. On the other hand, the top losers were Jaiprakash Power Ventures, Indian Overseas Bank and Reliance Infrastructure. In the index options segment, maximum OI was being seen in the 8500-8700 calls and 8300-8100 puts. In today's session, while the traders preferred to exit 8500 put, heavy buildup was seen in the 8100 put. On the other hand, traders exited from 8700 Call, while 8500 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 5.90% and reached 16.37. The 50-share CNX Nifty was down by 160.55 points or 1.88% to settle at 8,361.00.

Nifty July 2015 futures closed at 8372.80 on Monday at a premium of 11.80 points over spot closing of 8,361.00, while Nifty August 2015 futures ended at 8415.95 at a premium of 54.95 points over spot closing. Nifty July futures saw contraction of 02.00 million (mn) units, taking the total outstanding open interest (OI) to 17.95 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 discount of 0.45 points at 291.85 compared with spot closing of 292.30. The number of contracts traded were 28,047.

Tata Motors July 2015 futures traded at a premium of 0.05 points at 377.30 compared with spot closing of 377.25. The number of contracts traded were 36,616.

Reliance July 2015 futures traded at a premium of 5.40 points at 1007.50 compared with spot closing of 1,002.10. The number of contracts traded were 75,437.

HDFC Bank July 2015 futures traded at a premium of 2.35 points at 1096.95 compared with spot closing of 1,094.60. The number of contracts traded were 32,336.

Axis Bank July 2015 futures traded at a premium of 1.10 points at 557.05 compared with spot closing of 555.95. The number of contracts traded were 30,549.

Among Nifty calls, 8500 SP from the July month expiry was the most active call with an addition of 2.69 million open interests.  Among Nifty puts, 8400 SP from the July month expiry was the most active put with a contraction of 0.57 million open interests. The maximum OI outstanding for Calls was at 8600 SP (5.88 mn) and that for Puts was at 8300 SP (4.80 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8451.62 --- Pivot Point 8401.58 --- Support --- 8310.97.

The Nifty Put Call Ratio (PCR) finally stood at 1.02 for July month contract.  The top five scrips with highest PCR on OI were Dr. Reddys Laboratories (1.66), Hindustan Petroleum (1.27), IndusInd Bank (1.21), Ambuja Cements (1.13) and Grasim Industries (1.09). 

Among most active underlying, Reliance Industries witnessed a counteraction of 8.53 million of Open Interest in the July month futures contract, followed by Axis Bank witnessing a contraction of 1.51 million of Open Interest in the July month contract; Infosys witnessed a contraction of 2.37 million of Open Interest in the July month contract, HDFC Bank witnessed a contraction of 5.36 million of Open Interest in the July month contract and Maruti Suzuki India witnessed a contraction of 0.44 million units of Open Interest in the July month's future contract.