Nifty makes triple digit losses; closes below 8350 level

Nifty continued its south-bound journey for the fourth consecutive day and snapped the session below its crucial 8350 mark on Wednesday as uncertainty over the fate of a key nationwide tax bill and global volatility following devaluation of the Chinese yuan weighed on blue chips. On the global front, the Asian markets closed in red on Wednesday as investors booked profits and stayed away from risky assets and turned to government debt after China allowed the yuan to drop sharply for the second consecutive day. Later the European markets too made a weak start amid concerns that financial-market volatility sparked by China’s currency devaluation will crimp global growth.

Back home, the benchmark got off to a somber opening, extending the downtrend for the fourth straight session as pessimistic sentiments prevailed across Asian markets. The selling pressure accentuated in the late afternoon trades as investors took to across the board risk aversion. The sentiments were under pressure as global equity and commodity markets continued to reel under selling pressure on fears that China's yuan devaluation could spark a global currency war and weigh on global economic growth. China's central bank has devalued the yuan for the second day running, boosting the appeal of top-rated government bonds. Renewed weakness in rupee on the back of capital outflows and continued protests by Congress in Parliament also sapped investors' appetite for risk ahead of industrial output and consumer inflation data due out later in the day. The frontline index witnessed a freefall in the session finding absolutely no support at any crucial levels and eventually settled around the lowest point in the session. Traders were seen piling position in IT, TECK and Consumer Durables stocks, while selling was witnessed in Realty, Metal and PSU sector stocks.

The top gainers from the F&O segment were HCL Technologies, Tech Mahindra and Sun Pharmaceuticals Industries. On the other hand, the top losers were Housing Development and Infrastructure, Hindustan Petroleum Corporation and Indian Oil Corporation. 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 8400 put, heavy buildup was seen in the 8300 put. On the other hand, traders exited from 8800 Call, while 8400 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 9.77% and reached 17.44. The 50-share CNX Nifty was down by 112.90 points or 1.33% to settle at 8,349.45. Nifty August 2015 futures closed at 8365.45 on Wednesday at a premium of 16.01 points over spot closing of 8,349.45, while Nifty September 2015 futures ended at 8404.05 at a premium of 54.60 points over spot closing. Nifty August futures saw contraction of 0.52 million (mn) units, taking the total outstanding open interest (OI) to 16.02 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 1.55 points at 257.70 compared with spot closing of 256.15. The number of contracts traded were 43,800.

Ashok Leyland August 2015 futures traded at a premium of 0.50 points at 88.40 compared with spot closing of 87.90. The number of contracts traded were 25,675.

ICICI Bank August 2015 futures traded at a premium of 1.00 points at 293.00 compared with spot closing of 292.00. The number of contracts traded were 21,155.

Tata Motors August 2015 futures traded at a discount of 1.75 points at 354.65 compared with spot closing of 356.40. The number of contracts traded were 27,356.

Tata Steel August 2015 futures traded at a premium of 0.50 points at 249.95 compared with spot closing of 249.45. The number of contracts traded were 37,584.

Among Nifty calls, 8500 SP from the August month expiry was the most active call with an addition of 1.08 million open interests.  Among Nifty puts, 8400 SP from the August month expiry was the most active put with a contraction of 0.46 million open interests. The maximum OI outstanding for Calls was at 8700 SP (5.12 mn) and that for Puts was at 8200 SP (5.90 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8418.28--- Pivot Point 8378.12--- Support --- 8309.28.

The Nifty Put Call Ratio (PCR) finally stood at 0.89 for August month contract.  The top five scrips with highest PCR on OI were Bosch (2.67), Dr. Reddys Laboratories (2.16), Maruti Suzuki India (1.40), TCS (1.15) and Aditya Birla Nuvo (1.09). 

Among most active underlying, State Bank of India witnessed an addition of 5.18 million of Open Interest in the August month futures contract, followed by Hindustan Petroleum Corporation witnessing a contraction of 0.20 million of Open Interest in the August month contract; Tata Steel witnessed an addition  of 2.05 million of Open Interest in the August month contract, Ashok Leyland witnessed an addition of 0.65 million of Open Interest in the August month contract and Reliance Industries witnessed a contraction of 0.07 million units of Open Interest in the August month's future contract.