Nifty prolongs downtrend for third consecutive session

Tuesday’s session saw nifty complete a hat-trick of disappointing performances and reaching the finishing line only after collapsing by over three fourth of a percent as Investors remained worries over the logjam in Parliament about the key goods and service tax (GST) bill and global volatility after China unexpectedly devalued its currency. With only two days for Parliament’s monsoon session to end, investors worry that a key reform on goods and services tax might get delayed amid continued protests by the Opposition. On the global front, Asian market closed in red as investors weighed the implications of the surprise move, which seemed to end months of officially sanctioned yuan strength. The European markets too made a weak start, dragged down by exporters like carmakers, miners and luxury-goods after China’s central bank devalued yuan, ending a de-facto peg to the dollar that had been in place since March.

Back home, after getting a cautious start, nifty showed some strength and traded near neutral line in morning session as gains in the technology pack offset the losses in financials and auto shares. Some support also came with the Organisation for Economic Cooperation and Development's (OECD) statement that it expected India's growth to be stable, even as it forecast a slowing of the Chinese economy. However, the index witnessed steep fall of about 40 points in afternoon trade tracking weakness in the Asian peers with China equities losing steam after China devalued the yuan on Tuesday after a run of poor economic data, guiding the currency to its lowest point in almost three years. Sentiments remained down-beat with Moody's report which stated that India’s sovereign credit profile is more exposed to the negative effects of a drought than most other Baa rated sovereigns because of relatively high share of agriculture in overall employment, weak rural infrastructure and irrigation, inefficient food distribution, large proportion of Indian household spending that goes towards food, and share of food subsidy costs in the government's fiscal deficits. Besides, release of the macroeconomic numbers CPI and IIP due to be released tomorrow coupled with weakness in Rupee after China devalued yuan by nearly 2% also hurt the sentiments.  The frontline index kept losing steam thereafter and even drifted to the lowest point in the session in late afternoon trades. Nevertheless, late short covering in blue-chip stocks ensured that local index go home with relatively less losses. Traders were seen piling position in IT and TECK stocks, while selling was witnessed in Metal, Realty and PSU sector stocks.

The top gainers from the F&O segment were Ajanta Pharma, Divi's Laboratories and Reliance Power. On the other hand, the top losers were Apollo Tyres, Jain Irrigation Systems and Engineers India. In the index options segment, maximum OI was being seen in the 8600-8800 calls and 8200-8400 puts. In today's session, while the traders preferred to exit 8800 put, heavy buildup was seen in the 8500 put. On the other hand, traders exited from 8500 Call, while 8200 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 2.76% and reached 15.89. The 50-share CNX Nifty was down by 63.25 points or 0.74% to settle at 8,462.35. Nifty August 2015 futures closed at 8490.80 on Tuesday at a premium of 28.45 points over spot closing of 8,462.35, while Nifty September 2015 futures ended at 8532.05 at a premium of 69.70 points over spot closing. Nifty August futures saw contraction of 0.03 million (mn) units, taking the total outstanding open interest (OI) to 16.54 million (mn) units. The near month derivatives contract will expire on August 27, 2015.

From the most active contracts, SBI August 2015 futures traded at premium of 2.30 points at 270.20 compared with spot closing of 267.90. The number of contracts traded were 1, 09,155.

ICICI Bank August 2015 futures traded at a premium of 0.20 points at 303.60 compared with spot closing of 303.40. The number of contracts traded were 19,261.

Tata MotorsAugust 2015 futures traded at a premium of 1.30 points at 369.15 compared with spot closing of 367.85. The number of contracts traded were 32,578.

Tata Steel August 2015 futures traded at a premium of 0.85 points at 248.15 compared with spot closing of 247.30. The number of contracts traded were 17,343.

Reliance August 2015 futures traded at a premium of 4.90 points at 970.90 compared with spot closing of 966.00. The number of contracts traded were 23,255.

Among Nifty calls, 8600 SP from the August month expiry was the most active call with an addition of 0.65 million open interests.  Among Nifty puts, 8500 SP from the August month expiry was the most active put with a contraction of 1.04 million open interests. The maximum OI outstanding for Calls was at 8800 SP (4.91 mn) and that for Puts was at 8200 SP (6.27 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8531.97--- Pivot Point 8486.63--- Support --- 8417.02.

The Nifty Put Call Ratio (PCR) finally stood at 1 for August month contract.  The top five scrips with highest PCR on OI were Bosch (2.67), Dr. Reddys Laboratories (1.74), Maruti Suzuki India (1.59), Aditya Birla Nuvo (1.34) and BHEL (1.22). 

Among most active underlying, State Bank of India witnessed an addition of 5.38 million of Open Interest in the August month futures contract, followed by Apollo Tyres witnessing an addition of 1.42 million of Open Interest in the August month contract; Hindustan Petroleum Corporation witnessed an addition  of 0.44 million of Open Interest in the August month contract, Reliance Industries witnessed a contraction of 0.16 million of Open Interest in the August month contract and Tata Steel witnessed an addition of 2.48 million units of Open Interest in the August month's future contract.