Weak IT stocks drag Nifty below 8,150 mark

The fifty stock index -- Nifty – commenced the fresh week on a sluggish note as software stocks declined, led by Infosys as it reduced its full-year US dollar revenue growth guidance, while worries retail inflation for September could edge higher also weighed on the sentiments. Infosys cut its fiscal year 2016 revenue forecast saying broad weakness in IT spending and a stronger dollar were making clients wary. On the global front, Asian equity markets ended mostly in green on Monday, as investors hunted for bargains in industrials and basic materials, fueled by a rebound in commodities while the dollar struggled as hopes of a Fed rate rise this year grew even dimmer. The Chinese market led the gains, up by over 3 percent, as Chinese regulators are planning to increase their oversight of algorithmic traders, extending a campaign to stabilize the equity market that result in high volatility and exodus by foreign investors. On the other hand, European stocks declined in early trade, facing the prospect of breaking their longest winning streak in almost three months.

Back home, the benchmark got off to a positive start as investors were largely influenced by the supportive leads from Asian markets. However, the indices dropped into the red terrain sooner than later, lacking any significant upside cues.  Investors remained on the sidelines and refrained from any buying activity ahead of consumer price index (CPI) and industrial production data scheduled to be unveiled after market hours today.  Also, participants are eyeing the Bihar elections, whose outcome will set the tone for the market in future. Though, market traded range bound till mid afternoon trade but witnessed a drastic fall in last leg of trade tracking downtick in European counterparts. Investors failed to get any sense of relief with Chief Economic Advisor Arvind Subramanian’s statement that growth in collection of indirect taxes in the first half of the current fiscal shows robust GDP expansion. Indirect tax collection increased 35.8 percent in the April-September period of the 2015-16 fiscal to Rs 3.24 lakh crore. Traders were seen piling position in Metal, Power and Capital Goods stocks, while selling was witnessed in IT, TECK and FMCG sector stocks. Eventually, Nifty ended the sluggish day of trade with a cut of over half percent tad below its crucial 8,150 mark.

The top gainers from the F&O segment were Adani Power, Vedanta and Jaiprakash Associates. On the other hand, the top losers were Bharti Infratel, Infosys and Bank of Baroda. In the index options segment, maximum OI was being seen in the 8200-8500 calls and 7800-8100 puts. In today's session, the 8200, 8300 and 8500 Call strikes saw addition of 8.26, 6.72 and 3.67 lakh shares, respectively. On the other hand, 8200, 8100 and 8000 Put strikes saw addition of 1.30, 2.89 and 3.31 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.04% and reached 19.12. The 50-share CNX Nifty was down by 46.10 points or 0.56% to settle at 8,143.60. Nifty October 2015 futures closed at 8149.60 on Monday at a premium of 6.00 points over spot closing of 8,143.60, while Nifty November 2015 futures ended at 8187.90 at a premium of 44.30 points over spot closing. Nifty October futures saw addition of 0.59 million (mn) units, taking the total outstanding open interest (OI) to 21.84 million (mn) units. The near month derivatives contract will expire on October 29, 2015.  

From the most active contracts, SBI Bank October 2015 futures traded at premium of 0.40 points at 244.55 compared with spot closing of 244.15. The number of contracts traded were 24,100. 

Vedanta October 2015 futures traded at a premium of 1.10 points at 111.30 compared with spot closing of 110.20. The number of contracts traded were 30,338. 

ICICI Bank October 2015 futures traded at a premium of 0.85 points at 287.60 compared with spot closing of 286.75. The number of contracts traded were 18,977. 

Hindalco October 2015 futures traded at a premium of 1.05 points at 88.85 compared with spot closing of 87.80. The number of contracts traded were 21,933.  

Bank of Baroda October 2015 futures traded at a premium of 1.25 points at 177.25 compared with spot closing of 176.00. The number of contracts traded were 20,007.  

Among Nifty calls, 8300 SP from the October month expiry was the most active call with an addition of 0.67 million open interests.  Among Nifty puts, 8000 SP from the October month expiry was the most active put with an addition of 0.33 million open interests. The maximum OI outstanding for Calls was at 8300 SP (5.42 mn) and that for Puts was at 8100 SP (4.65 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8216.00 --- Pivot Point 8172.10 --- Support --- 8099.70.

The Nifty Put Call Ratio (PCR) finally stood at 1.22 for October month contract.  The top five scrips with highest PCR on OI were Indraprastha Gas (1.70), Tata Steel (1.28), Exide Industries (1.26), Tata Motors (1.16) and ONGC (1.11).   

Among most active underlying, Infosys witnessed an addition of 1.22 million of Open Interest in the October month futures contract, followed by Tata Consultancy Services witnessing an addition of 0.33 million of Open Interest in the October month contract; Tata Motors witnessed an addition of 2.10 million of Open Interest in the October month contract, Maruti Suzuki India witnessed an addition of 0.22 million of Open Interest in the October month contract and Vedanta witnessed an addition of 0.82 million units of Open Interest in the October month's future contract.