Nifty skids lower for third day in a row; ends below 7750 level

Wednesday’s trading session turned out to be a disappointing for the Indian benchmark Nifty as market participants booked all their initial gains hurt by selling in frontline blue chip counters. The gains were wiped out by weak Asian markets, which fell for the third straight day on Wednesday over concerns of weak manufacturing data from China, and weakness in the US markets in overnight trade, which raised concerns over slowing global growth. European shares tumbled back into the red, after a slight reprieve in early morning trade, as investors once again fled to the sidelines amid concerns about growth in China.

Back home, the benchmark got off to a positive start in the morning trade on revival of buying by funds and retail investors after the government's decision to waive minimum alternate tax (MAT) on foreign investors for the period before April 1, 2015. The government's announcement comes in the wake of record selling from foreign investors last month. In August, foreign investors sold shares worth Rs 16,877 crore. Some support also came with the statement of Chief Economic Adviser (CEA) Arvind Subramanian that slowdown in China is a historic opportunity for India as Chinese production becomes less profitable. However, the index failed to capitalize on the initial momentum and continued to see-saw around the neutral line as investors remained sideways in the absence of any significant trigger at domestic front.  The key index suffered a setback in afternoon trades as sudden bouts of selling emerged in the local market immediately after European shares drifted into the red terrain post a positive opening. The index moved only sideways thereafter but touched intraday lows in the final hour of the session. Banking stocks came under pressure after Reserve Bank of India (RBI) issued draft guidelines on Tuesday for its proposed plan to change how banks calculate their lending rates. The new norms, if implemented, could hit the margins of banks in a falling interest rate scenario. On the flip side, Oil & gas explorers gained after the government approved the auction of 69 small and marginal oil and gas fields. Finally, Nifty ended the session below its crucial 7,750 mark with a cut of sixty eight points or 0.88%.

The top gainers from the F&O segment were Sun TV Network, Reliance Capital and CEAT. On the other hand, the top losers were Union Bank of India, LIC Housing Finance and Bharat Heavy Electricals. In the index options segment, maximum OI was being seen in the 8200-8500 calls and 7600-8000 puts. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session, which indicates that traders have slowdown buying options contracts. 

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 7.19% and reached 26.65. The 50-share CNX Nifty was down by 68.85 points or 0.88% to settle at 7,717. Nifty September 2015 futures closed at 7742.15 on Wednesday at a premium of 25.15 points over spot closing of 7,717.00, while Nifty October 2015 futures ended at 7780.20 at a premium of 63.20 points over spot closing. Nifty September futures saw addition of 0.65 million (mn) units, taking the total outstanding open interest (OI) to 22.78 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 0.50 points at 230.85 compared with spot closing of 230.35. The number of contracts traded were 44,548.

ICICI Bank September 2015 futures traded at a premium of 1.50 points at 265.75 compared with spot closing of 264.25. The number of contracts traded were 25,841.

Tata Motors September 2015 futures traded at a premium of 0.60 points at 324.60 compared with spot closing of 324.00. The number of contracts traded were 16,600.

Tata Steel September 2015 futures traded at a discount of 0.70 points at 220.20 compared with spot closing of 220.90. The number of contracts traded were 18,120.

Reliance September 2015 futures traded at a premium of 0.10 points at 853.10 compared with spot closing of 853.00. The number of contracts traded were 17,687.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with an addition of 0.45 million open interests.  Among Nifty puts, 7500 SP from the September month expiry was the most active put with an addition of 0.95 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.54 mn) and that for Puts was at 7800 SP (4.69 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7819.95--- Pivot Point 7759.60--- Support --- 7656.65.

The Nifty Put Call Ratio (PCR) finally stood at 1.07 for September month contract.  The top five scrips with highest PCR on OI were JSW Steel (1.34), Bajaj Finance (1.33), Apollo Hospitals Enterprise (1.08), Canara Bank (1.06) and Havells India (1.03).  

Among most active underlying, State Bank of India witnessed an addition of 8.46 million of Open Interest in the September month futures contract, followed by Axis Bank witnessing an addition of 1.22 million of Open Interest in the September month contract; ICICI Bank witnessed an addition of 1.34 million of Open Interest in the September month contract, Tata Consultancy Services witnessed an addition of 0.19 million of Open Interest in the September month contract and Infosys witnessed an addition of 0.28 million units of Open Interest in the September month's future contract.