Nifty prolongs downtrend for second consecutive session

The fifty stock index -- Nifty -- extended its downfall for second consecutive day and finished the volatile day of trade with a marginal cut of ten points as a steep fall in China's markets revived global risk aversion, while caution ahead of key corporate earnings such as Wipro, Idea Cellular also weighed on sentiment. Sentiments also remained dampened after report that government deferred a decision on convening the Winter Session of Parliament till next week, amid indications that it could be summoned any day after November 19. But a final decision will be taken by the Cabinet Committee of Parliamentary Affairs (CCPA) on October 26. On the global front, Asian markets ended in green led by the Japanese market, which not only boosted the sentiments in the region but helped the MSCI Asia Pacific Index climb for the first time this week. On the other hand, China's Shanghai Composite slumped 3.06 per cent, the worst daily performance in five weeks, as a correction in small caps deepened through the day. European shares opened flat with a negative bias ahead of the European Central Bank’s meeting. However in later trade, FTSE 100, CAC 40 and DAX were trading between 0.3-0.5 percent higher.

Back home, after getting a cautious but positive start, Indian benchmark nifty showed some strength in morning trade as investors were largely influenced with supportive leads form other regional markets. Sentiments remained upbeat with a US Treasury Department report that amid weaker outlook across emerging market economies India's recovery has strengthened under a new reform agenda, since it is not a large importer. Further, dismissing Standard and Poor’s cautious remarks on the Indian economy as a mere “point of view”, the Finance Ministry said GDP will expand by over 7.5 per cent in the current fiscal and more reforms measures would be taken by the government to push growth. But, the key gauge suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets, tracking a slump in China markets which got pounded by over three percent. Traders were seen piling position in Metal, TECK and IT stocks, while selling was witnessed in Realty, Capital Goods and Banking sector stocks. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses go home with relatively small losses. 

The top gainers from the F&O segment were Castrol India, Vedanta and Reliance Capital. On the other hand, the top losers were Federal Bank, Indiabulls Real Estate and Shriram Transport Finance Company. In the index options segment, maximum OI was being seen in the 8200-8500 calls and 7800-8100 puts. In today's session, while the traders preferred to exit 8000 put, heavy buildup was seen in the 8100 put. On the other hand, traders exited from 8100 Call, while 8350 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.19% and reached 16.62. The 50-share CNX Nifty was down by 9.95 points or 0.12% to settle at 8,251.70.  Nifty October 2015 futures closed at 8262.30 on Wednesday at a premium of 10.60 points over spot closing of 8,251.70, while Nifty November 2015 futures ended at 8300.30 at a premium of 48.60 points over spot closing. Nifty October futures saw contraction of 0.54 million (mn) units, taking the total outstanding open interest (OI) to 19.04 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 0.80 points at 250.20 compared with spot closing of 249.40. The number of contracts traded were 24,871.   

Axis Bank October 2015 futures traded at a discount of 0.10 points at 511.40 compared with spot closing of 511.50. The number of contracts traded were 20,241.      

Tata Motors October 2015 futures traded at a premium of 0.05 points at 380.95 compared with spot closing of 380.90. The number of contracts traded were 24,134.     

Tata Steel October 2015 futures traded at a discount of 0.20 points at 244.80 compared with spot closing of 245.00. The number of contracts traded were 24,468.  

HDFC Bank October 2015 futures traded at a premium of 2.55 points at 1097.45 compared with spot closing of 1,094.90. The number of contracts traded were 23,841.    

Among Nifty calls, 8300 SP from the October month expiry was the most active call with a contraction of 0.05 million open interests.  Among Nifty puts, 8200 SP from the October month expiry was the most active put with an addition of 0.57 million open interests. The maximum OI outstanding for Calls was at 8300 SP (5.99 mn) and that for Puts was at 8200 SP (5.60 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8291.68--- Pivot Point 8254.42--- Support --- 8214.43.

The Nifty Put Call Ratio (PCR) finally stood at 1.29 for October month contract.  The top five scrips with highest PCR on OI were Lupin (1.67), ZEEL (1.44), Tata Motors (1.21), Tata Motors - DVR (1.33) and STAR (1.13).   

Among most active underlying, Reliance Industries witnessed a contraction of 1 million of Open Interest in the October month futures contract, followed by Infosys witnessing a contraction of 1.29 million of Open Interest in the October month contract; Bajaj Auto witnessed an addition of 0.08 million of Open Interest in the October month contract, HDFC Bank witnessed a contraction of 1.27 million of Open Interest in the October month contract and State Bank of India witnessed a contraction of 0.94 million units of Open Interest in the October month's future contract.