Bears hit back with a vengeance; Nifty down 2.15%

Friday’s session turned out to be a horrendous session for the Nifty which disintegrated like a ‘house of cards’ and went on to breach various key technical levels in the over two percent freefall. The uncertainty over the US Fed rate hike spooked global markets and the Nifty was no exception. Sentiment was also dampened on fears of poor agriculture output as monsoon deficit widened, triggering selling activity. On the global front, Asian stocks declined on the final trading day of the week, as investors awaited the U.S. nonfarm payrolls report for August that may play a crucial role in the Federal Reserve's decision about when to lift interest rates. European stocks were also down in early trading.

Back home, the benchmark got off to a pessimistic start following the Asian peers as investors remain cautious about a US jobs report jostled with signals from the European Central Bank that it is willing to take further steps to shore up the European economy. The selling pressure accentuated in the mid morning trades as investors took to across the board risk aversion after exporters body FIEO said that the decline in outbound shipments has “pulled down” India's GDP growth in the April-June quarter by over 3 percent. The index moved only sideways thereafter but touched intraday lows in the late afternoon session. Investors were concerned about the sustained capital outflows of the foreign investors’, FPIs withdrew a net Rs 17,428 crore from the domestic stock market in August, the biggest since Jan 2008.  On top of that, they sold Indian stocks worth nearly Rs 2,650 crore in the first three days of this month. This selloff from foreign investors comes despite the government earlier this week announcing relief to foreign investors on minimum alternative tax. Besides worries over global economy, concerns over slowdown in Indian economy, pace of reforms and weak monsoon have also weighed on market sentiment. Though, all the sectoral indices plunged, the rate sensitives were the worst affected despite the Minister of State for Finance Jayant Sinha’s statement that the Reserve Bank of India will factor in domestic as well as global deflationary trends while deciding policy rates. He has also said that Indian economy could grow close to 8 per cent this fiscal. Finally, Nifty ended a tad above its crucial 7,650 mark with a massive cut of 2.15 percent. 

The top gainers from the F&O segment were Sun TV Network, Indian Oil Corporation and Amtek Auto. On the other hand, the top losers were Housing Development and Infrastructure, Power Finance Corporation and Rural Electrification Corporation. 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 8200 Call, while 7700 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 9.56% and reached 26.42. The 50-share CNX Nifty was down by 167.95 points or 2.15% to settle at 7,655.05. Nifty September 2015 futures closed at 7664.35 on Friday at a premium of 9.30 points over spot closing of 7,655.05, while Nifty October 2015 futures ended at 7705.55 at a premium of 50.50 points over spot closing. Nifty September futures saw addition of 0.50 million (mn) units, taking the total outstanding open interest (OI) to 23.19 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 0.25 points at 225.25 compared with spot closing of 225.00. The number of contracts traded were 38,909.

ICICI Bank September 2015 futures traded at a premium of 0.80 points at 258.90 compared with spot closing of 258.10. The number of contracts traded were 25,861.

DLF September 2015 futures traded at a premium of 0.75 points at 117.05 compared with spot closing of 116.30. The number of contracts traded were 18,984.

Reliance September 2015 futures traded at a premium of 2.90 points at 837.95 compared with spot closing of 835.05. The number of contracts traded were 21,875.

Axis Bank September 2015 futures traded at a premium of 1.85 points at 470.25 compared with spot closing of 468.40. The number of contracts traded were 26,641.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with an addition of 0.71 million open interests.  Among Nifty puts, 8000 SP from the September month expiry was the most active put with an addition of 0.35 million open interests. The maximum OI outstanding for Calls was at 8000 SP (0.35 mn) and that for Puts was at 7500 SP (0.30 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7764.35--- Pivot Point 7695.60--- Support --- 7586.30.

The Nifty Put Call Ratio (PCR) finally stood at 1.02 for September month contract.  The top five scrips with highest PCR on OI were Indraprastha Gas (1.884), JSW Steel (1.23), Bajaj Finance (1.17), Wipro (0.97) and Havells (0.96).   

Among most active underlying, State Bank of India witnessed an addition of 0.95 million of Open Interest in the September month futures contract, followed by ICICI Bankwitnessing a contraction of 0.44 million of Open Interest in the September month contract; Axis Bank witnessed a contraction of 0.25 million of Open Interest in the September month contract, Reliance Industries witnessed a contraction of 0.53 million of Open Interest in the September month contract and Infosys witnessed an addition of 0.07 million units of Open Interest in the September month's future contract.