Nifty skids lower for second day in a row; ends below 7800 level

The drop in Asian markets and below-expected macro data sobered investor sentiments in the equities markets on Tuesday, leading a benchmark index Nifty to close with loss of 185 points or 2.33 per cent. Global stocks and commodity prices tumbled, as poor Chinese data saw fears about its economic health intensify. Besides, weak manufacturing PMI and June quarter GDP data also dampened the sentiment. On the global front, Asian markets closed in red as losses on Wall Street overnight and new manufacturing data out of the world's second-largest economy curbed risk appetite. China's official Purchasing Managers' Index (PMI) fell to 49.7 in August from the previous month's reading of 50.0, the weakest showing in three year. Moreover, European stock markets traded with over 2.5 per cent cuts in early trade, while Dow futures indicated a lower opening for the Wall Street.

Back home, the benchmark got off to a somber opening, extending the downtrend for the second straight session as pessimistic sentiments prevailed across Asian markets. Investors were also disappointed with a series of weak economic data in India. Growth in core sector, which contributes nearly 40 per cent to industrial output, slowed to a 3-month low, while June quarter GDP grew below estimates at 7 per cent.  Banking and financial stocks led the fall after reports of HDFC Bank's steep base rate cut on Monday sparked fears that other lenders will be able to match it only at the cost of margins. The selling pressure accentuated in the morning trades as investors took to across the board risk aversion tracking downtick in European counterparts. Some concern also came with the India Meteorological Department’s report that monsoon has been deficient by 11 percent so far with August recording 22 percent less than normal rainfall, raising the prospect of lower foodgrains production for the Kharif season than 2014 if the situation does not improve in September. Thereafter, the frontline index kept losing momentum through the session and finally ended the session below its crucial 7,800 mark with a cut of over two percent. 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 Banking, Metal and Realty.

The top gainers from the F&O segment were UPL, United Breweries and Ajanta Pharma. On the other hand, the top losers were JSW Energy, Punjab National Bank and Amtek Auto. In the index options segment, maximum OI was being seen in the 8200-8500 calls and 7800-8000 puts. In today's session, while the traders preferred to exit 8000 put, heavy buildup was seen in the 7500 put. On the other hand, traders exited from 9000 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 16.76% and reached 28.71. The 50-share CNX Nifty was down by 185.45 points or 2.33% to settle at 7,785.85. Nifty September 2015 futures closed at 7798.80 on Tuesday at a premium of 12.95 points over spot closing of 7,785.85, while Nifty October 2015 futures ended at 7837.35 at a premium of 51.50 points over spot closing. Nifty September futures saw addition of 0.01 million (mn) units, taking the total outstanding open interest (OI) to 22.12 million (mn) units. The near month derivatives contract will expire on September 24, 2015. 

From the most active contracts, SBI September 2015 futures traded at premium of 0.65 points at 239.95 compared with spot closing of 239.30. The number of contracts traded were 35,628.

Ashok Leyland September 2015 futures traded at a discount of 0.25 points at 87.55 compared with spot closing of 87.80. The number of contracts traded were 16,430.

ICICI Bank September 2015 futures traded at a premium of 0.75 points at 272.10 compared with spot closing of 271.35. The number of contracts traded were 23,675.

Tata Motors September 2015 futures traded at a discount of 1.90 points at 326.10 compared with spot closing of 328.00. The number of contracts traded were 23,828.

Reliance September 2015 futures traded at a premium of 5.70 points at 843.85 compared with spot closing of 838.15. The number of contracts traded were 27,788.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with an addition of 0.77 million open interests.  Among Nifty puts, 7500 SP from the September month expiry was the most active put with an addition of 0.53 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.27 mn) and that for Puts was at 7800 SP (4.77 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7894.47--- Pivot Point 7820.48--- Support --- 7711.87.

The Nifty Put Call Ratio (PCR) finally stood at 1.09 for September month contract.  The top five scrips with highest PCR on OI were Shriram Transport Finance Company (1.48), JSW Steel (1.29), Wipro (1.09), Apollo Hospitals Enterprise (1.08) and Canara Bank (1.05).  

Among most active underlying, State Bank of India witnessed an addition of 3.17 million of Open Interest in the September month futures contract, followed by Maruti Suzuki India witnessing an addition of 0.07 million of Open Interest in the September month contract; Reliance Industries witnessed an addition of 0.09 million of Open Interest in the September month contract, Ashok Leyland witnessed an addition of 2.87 million of Open Interest in the September month contract and Axis Bank witnessed an addition of 1.46 million units of Open Interest in the September month's future contract.