Bears run berserk late in the session; Nifty ends below 7850 level

Weak European cues, dwindling rupee value coupled with anxiety over the upcoming derivatives expiry eroded investors' confidence at the Indian equity markets, causing a barometer index nifty to plunge more than two percent by the end of session. Investors failed to draw any sense of relief with India Meteorological Department’s (IMD) report that the enhanced activity of the southwest monsoon across several parts of the country for the next three-four days is giving a breather to regions reeling under severe water deficiency. On the global front, Asian markets ended mostly in green, stabilizing from sharp declines in the previous session, as Wall Street ended higher overnight. However, Europe’s benchmark stock index headed for its lowest close since late August on Tuesday, with car makers posting some of the biggest losses following calls for a wider probe of the industry in the wake of Volkswagen’s emission-test scandal.

Back home, the benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. Sentiments got some support with Finance Minister Arun Jaitley’s statement the government is confident of the new GST regime to roll out from the next fiscal. He also hopes that the economy will grow faster this year than last, and expects that Asia's third-largest economy will not see a big hit from China's slowdown. The frontline index soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the index traded around the neutral line though the morning session. Thereafter, the key index failed to show any kind of fervor due to lack of encouraging leads. The key gauge suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Sentiments weakened further after Asian Development Bank (ADB) lowered growth projections for India for the current fiscal to 7.4 per cent, from the 7.8 per cent earlier, citing weak monsoon, poor external demand and inability of the government to push economic reforms in Parliament. Rate-sensitive sectors like banks, realty and auto witnessed heavy selling pressure ahead of the RBI Monetary policy which is scheduled on September 29. Besides, IT stocks that witnessed strong buying helping the upmove of market in early deals, too lost the direction and ended in red. Finally, Nifty ended the session below its crucial 7850 mark with a cut of over two percent.

The top gainers from the F&O segment were MindTree, Hexaware Technologies and Oracle Financial Services Software. On the other hand, the top losers were Amtek Auto, Motherson Sumi Systems and Hindalco Industries. In the index options segment, maximum OI was being seen in the 7900-8200 calls and 7200-7500 puts. In today's session, some traders exited from 8100, 8000 and 7900 Put on the back of profit booking. On the other hand, 7800, 7900 and 8000 Call strikes saw addition of 16.04, 7.92 and 7.24 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 11.92% and reached 20.34. The 50-share CNX Nifty was down by 165.10 points or 2.07% to settle at 7812.

Nifty September 2015 futures closed at 7797.10 on Tuesday at a discount of 14.90 points over spot closing of 7,812.00, while Nifty October 2015 futures ended at 7832.25 at a premium of 20.25 points over spot closing. Nifty September futures saw contraction of 1.35 million (mn) units, taking the total outstanding open interest (OI) to 17.76 million (mn) units. The near month derivatives contract will expire on September 24, 2015. 

From the most active contracts, ICICI Bank September 2015 futures traded at premium of 0.25 points at 270.15 compared with spot closing of 269.90. The number of contracts traded were 32,391.

SBI September 2015 futures were trading flat compared with spot closing of 237.60. The number of contracts traded were 54,318.

Tata Motors September 2015 futures traded at a discount of 2.40 points at 315.00 compared with spot closing of 315.00. The number of contracts traded were 43,143.

Axis Bank September 2015 futures traded at a premium of 2.55 points at 509.05 compared with spot closing of 506.50. The number of contracts traded were 36,229.

Reliance September 2015 futures traded at a premium of 0.95 points at 846.95 compared with spot closing of 846.00. The number of contracts traded were 48,889.

Among Nifty calls, 8000 SP from the September month expiry was the most active call with an addition of 0.72 million open interests.  Among Nifty puts, 7800 SP from the September month expiry was the most active put with an addition of 1.22 million open interests. The maximum OI outstanding for Calls was at 8000 SP (4.79 mn) and that for Puts was at 7800 SP (5.93 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7959.82 --- Pivot Point 7873.78 --- Support --- 7725.97.

The Nifty Put Call Ratio (PCR) finally stood at 1.05 for September month contract.  The top five scrips with highest PCR on OI were Indraprastha Gas (1.63), Maruti Suzuki India (1.39), IndusInd Bank (1.35), Ultratech Cement (1.30) and CEAT (1.18).   

Among most active underlying, State Bank of India witnessed a contraction of 1.85 million of Open Interest in the September month futures contract, followed by HDFC Bank witnessing a contraction of 6.58 million of Open Interest in the September month contract; Reliance Industries witnessed a contraction of 4.61 million of Open Interest in the September month contract, Infosys witnessed a contraction of 3.13 million of Open Interest in the September month contract and Axis Bank witnessed a contraction of 5.48 million units of Open Interest in the September month's future contract.