Nifty collapse on first day of F&O expiry week; deposes about 490 pts

The local benchmark, Nifty remained downcast for yet another session on Monday and extended their losses for the fifth consecutive day after witnessing wild swings. Bears hammered bulls throughout the session giving bulls no chance to pounce back, taking full control over the market, bears dragged Nifty below its crucial 7,900 mark. The sentiments were subdued from early morning trades, which deteriorated further on heavy selling by funds, impacted by the Chinese slump. Besides, investors remained unnerved as the rupee fell sharply on stalled growth in China and weakness in the local equities. Today’s fall marks the fourth biggest crash in history in terms of absolute value. On the global front, Asian markets closed in red on Monday, with China’s Shanghai Composite index posting its biggest one-day percentage loss since 2007, on worries over weakness in Chinese economy after a private survey on Friday showed that nations factory output fell to multi-year lows. European stocks were not far behind and made a weak start, with markets in the region tumbling for a fourth day.

Back home, the benchmark nifty began the F&O expiry week on a somber note as investors booked profits in early trade tracking a massive sell-off in Chinese equities amid concerns that a meltdown in China can have implications on the global economy.  Sentiment on the street weakened further on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 2,341 crore on August, 21, 2015. The selloff in the rupee too weighed on the domestic markets the rupee slumped to its lowest since September 2013, adding to the panic of the investors, as the depreciation in the rupee hits foreign investors and diminishes their returns. Investors paid no heed towards central bank Governor Raghuram Rajan’s statement that India is in a good position compared with other emerging markets due to strengthening economic growth, moderating inflation, low short-term currency liabilities and a narrowing fiscal deficit.  The day largely remained characterized by position squaring amid absence of any positive leads that could lift the disintegrating sentiments. The benchmarks appeared to be on a southbound journey all through the day infringing all key technical levels as optimists remained uncomfortable to open any fresh positions ahead of the derivatives contract expiry for this month. Selling was both brutal and wide-based as none of sectoral indices on NSE were spared. Counters, which featured in the list of worst performers, include realty, PSU Bank and Energy.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility surged by 64.36% and reached 28.13. The 50-share CNX Nifty was down by 490.95 points or 5.92% to settle at 7,809.00. Nifty August 2015 futures closed at 7806.35 on Friday at a discount of 2.65 points over spot closing of 7,809.00, while Nifty September 2015 futures ended at 7844.55 at a premium of 35.55 points over spot closing. Nifty August futures saw addition of 1.45 million (mn) units, taking the total outstanding open interest (OI) to 16.19 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 1.00 points at 244.90 compared with spot closing of 243.90. The number of contracts traded were 57,448.

ICICI Bank August 2015 futures traded at a premium of 0.15 points at 269.25 compared with spot closing of 269.10. The number of contracts traded were 49,213.

Tata Motors August 2015 futures traded at a premium of 2.15 points at 306.10 compared with spot closing of 303.95. The number of contracts traded were 44,775.

Reliance August 2015 futures traded at a premium of 8.20 points at 829.95 compared with spot closing of 821.75. The number of contracts traded were 72,720.

HDFC Bank August 2015 futures traded at a discount of 1.95 points at 1015.05 compared with spot closing of 1,017.00. The number of contracts traded were 58,210.

Among Nifty calls, 8100 SP from the August month expiry was the most active call with an addition of 2.90 million open interests.  Among Nifty puts, 7900 SP from the August 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 (4.46 mn) and that for Puts was at 8200 SP (3.36 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7989.57--- Pivot Point 7879.48--- Support --- 7698.92.

The Nifty Put Call Ratio (PCR) finally stood at 0.64 for August month contract.  The top five scrips with highest PCR on OI were Bosch (3.50), Oracle Financial Services Software (3), Dr. Reddys Laboratories (1.19), Indiabulls Housing Finance (0.98) and Sun Pharmaceutical Industries (0.95). 

Among most active underlying, State Bank of India witnessed a contraction of 5.70 million of Open Interest in the August month futures contract, followed by Reliance Industries witnessing a contraction of 3.09 million of Open Interest in the August month contract; ICICI Bank witnessed an addition of 1.34 million of Open Interest in the August month contract, Maruti Suzuki India witnessed an addition of 0.04 million of Open Interest in the August month contract and Infosys witnessed a contraction of 0.28 million units of Open Interest in the August month's future contract.