Nifty snaps six days gaining streak; ends below 8350 mark

The Indian benchmark index --Nifty-- snapped six-day winning streak on Tuesday on account of profit-booking in frontline blue chip stocks. Sentiments remained dismal with the report that services sector grew at its slowest pace in seven months in June, marking the third straight month of a declining growth rate, as new business orders turned sluggish. The Nikkei Services Business Activity index, which maps the service sector activity, fell to 50.3 in June, from 51 in May. Some weakness also came with a private report stating that investments in projects remained elusive in the first quarter of the financial year 2016-17 with stalled projects running into an estimated Rs 11.2 lakh crore. The report has further said that most of the stalled projects are in the electricity (31%) and steel (25%) sectors. However, losses remained capped with the report that the RBI has achieved its desired 'neutral' liquidity in the first quarter itself, mainly on account of Rs 80,000 crore OMO (open market operation) purchases in the past three months and a reduction in cash in circulation in June 2016. 

On the global front, all the Asian equity indices barring China's benchmark Shanghai Composite finished the day’s trade in the negative terrain on Tuesday as commodities dropped and the Japanese yen strengthened on worries about renewed political uncertainty in the UK and the fragile balance sheets of Italian banks. Further, the European counter parts too traded with a negative bias and German Stock Index DAX 30 shed around one and half a percent, being the biggest laggard in the space.

Back home, after getting cautious but positive start, Nifty slipped into negative territory and extended its losses in noon session as selling intensify in frontline blue chip stocks post weak European market opening and on reports that India's GDP growth over the next two years will be challenged by lackluster global demand and high leverage in some corporate sectors. Thereafter, the index failed to show any kind of fervor due to lack of encouraging leads. However, some late short covering in blue-chip stocks ensured that local index go home with relatively small losses. Finally, Nifty ended the session below its crucial 8,350 mark with a cut of around half a percent. The top gainers from the F&O segment were Jaiprakash Associates, Unitech and The South Indian Bank. On the other hand, the top losers were Ashok Leyland, Sintex Industries and Exide Industries. In the index options segment, maximum OI was being seen in the 8200-8700 calls and 7900-8400 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.38% and reached 15.36. The 50-share Nifty was down by 34.75 points or 0.42% to settle at 8,335.95.

Nifty July 2016 futures closed at 8354.00 on Tuesday at a premium of 18.05 points over spot closing of 8,335.95, while Nifty August 2016 futures ended at 8390.10 at a premium of 54.15 points over spot closing. Nifty July futures saw contraction of 0.15 million (mn) units, taking the total outstanding open interest (OI) to 18.92 million (mn) units. The near month derivatives contract will expire on July 28, 2016. 

From the most active contracts, Ashok Leyland July 2016 futures traded at a discount of 0.35 points at 91.80 compared with spot closing of 92.15. The number of contracts traded were 8,121.  

State Bank of July 2016 futures traded at a premium of 0.55 points at 223.55 compared with spot closing of 223.00. The number of contracts traded were 14,351.    

ICICI Bank July 2016 futures traded at a premium of 1.85 points at 246.50 compared with spot closing of 244.65. The number of contracts traded were 11,447.     

Punjab National Bank July 2016 futures traded at a discount of 0.85 points at 113.00 compared with spot closing of 113.85. The number of contracts traded were 8,236.

Rural Electrification Corporation July 2016 futures traded at a premium of 1.35 points at 187.65 compared with spot closing of 186.30. The number of contracts traded were 9,281. 

Among Nifty calls, 8400 SP from the July month expiry was the most active call with an addition of 0.43 million open interests. Among Nifty puts, 8300 SP from the July month expiry was the most active put with an addition of 0.13 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.23 mn) and that for Puts was at 8000 SP (4.07 mn). The respective Support and Resistance levels of Nifty are: Resistance 8371.62 --- Pivot Point 8345.78 --- Support --- 8310.12.   

The Nifty Put Call Ratio (PCR) finally stood at 1.11 for July month contract. The top five scrips with highest PCR on OI were Grasim Industries (1.37), Torrent Pharmaceuticals (1.29), PC Jeweller (1.20), Mindtree (1.14) and Britannia Industries (1.12).   

Among most active underlying, Reliance Industries witnessed an addition of 0.37 million of Open Interest in the July month futures contract, followed Reliance Infrastructure witnessing an addition of 1.32 million of Open Interest in the July month contract; State Bank of India witnessed a contraction of 0.60 million of Open Interest in the July month contract, Larsen & Toubro witnessed an addition of 0.02 million of Open Interest in the July month contract and Ashok Leyland witnessed an addition of 4.19 million units of Open Interest in the July month's future contract.