Nifty closes at two month low on January F&O series expiry day

Nifty ended the January F&O series on a negative note with a loss of 205.20 points or 3.27%. Today, the Indian equity benchmark closed at its lowest level since Nov 27 after the much feared announcement by the US Federal Reserve to rollback its bond-buying by an additional $10 billion a month from $75 billion to $65 billion beginning from next month has led to a bloodbath in the market. On global front, Asian markets ended in the red amid rising fears of the US Fed tapering. Global sentiment was also subdued as China’s manufacturing sector contracted for the first time in six months in January. Further, European markets also made a negative opening on Thrusday.

Back home, Nifty made a gap down opening amid weak global cues as sentiments remained dampened after the US Federal Reserve's announcement for its tapering programme. Sentiments also weighed down as Reserve Bank of India (RBI) governor Raghuram Rajan termed inflation as both monetary and political issue, pressing the need for political establishment to understand the importance of curbing rising prices. The index continued its weak trade on account of high selling pressure witnessed in banking, realty and metal stocks. However, in the last leg of trade, nifty paired some of its losses amid buying in auto stocks and some frontline stocks such as Tata motors, Bharti Airtel and BHEL among others. Investors’ sentiments got some support as Finance Ministry assured investors that the fundamentals of the economy are strong and they should not have any worries over external factors such as fed taper. Finally, Nifty ended the session with a loss of 46 points.

Meanwhile, sectoral indices on the NSE made a negative closing. CNX PSU Bank down by 4.09%, CNX Realty down by 2.82%, CNX Metal down by 2.62%, CNX Finance down by 1.78% and CNX Media down by 1.56% remained the top losers in the trade. While, CNX Auto up by 0.21% remained the only gainer in the trade.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, down by 4.38% and reached 17.25.

Nifty February 2014 futures closed at 6103.85 on Thursday at a premium of 30.15 points over spot closing of 6,073.70, while Nifty March 2014 futures ended at 6139.90 at a premium of 66.20 points over spot closing. Nifty February futures saw an addition of 1.74 million (mn) units taking the total outstanding open interest (OI) to 15.95 mn units. The near month February 2014 derivatives contract will expire on February 26, 2014.

From the most active contracts, Reliance Industries February 2014 futures were at a premium of 6.90 points at 832.50 compared with spot closing of 825.60. The number of contracts traded was 24,490. 

ICICI Bank February 2014 futures were at a premium of 1.20 points at 982.20 compared with spot closing of 981.00. The number of contracts traded was 23,825. 

United Spirits February 2014 futures were at a premium of 25.45 points at 2458.45 compared with spot closing of 2433.00. The number of contracts traded was 44,472. 

SBI February 2014 futures traded at a premium of 2.50 points at 1520.55 compared with spot closing of 1518.05. The number of contracts traded was 38,019.

Among Nifty calls, 6,100 SP from the February month expiry was the most active call with an addition of 1.14 million in open interest.

Among Nifty puts, 6,000 SP from the February month expiry was the most active put with  an addition of 0.86 million open interests.

The maximum OI outstanding for Calls was at 6,100 SP (1.14 mn) and that for Puts was at 6,000 SP (4.82 mn). The respective Support and Resistance levels of Nifty are: Resistance 6095.28 -- Pivot Point 6061.27 - Support- 6039.68.

The Nifty Put Call Ratio (PCR) OI wise, finally stood at 0.71 for January month contract. The top five scrips with highest PCR on OI were DR Reddy 3.71, REC 3.17, HCL Tech 2.36, Infosys 2.28 and Federal Bank 2.14.

Among most active underlying, MCDOWELL-N (United Spirits)  witnessed contraction of 0.77 million of Open Interest in the January month futures contract, followed by Auro Pharma witnessing contraction of 2.06 million of Open Interest in the January month contract; Infosys witnessed contraction of 0.05 million of Open Interest in the January month futures. SBI witnessed contraction of 1.30 million of Open Interest in the January month contract and ICICI Bank witnessed contraction of 1.26 million in Open Interest in the expiring January month’s future contract.