Nifty witnesses heavy selling pressure on Thursday

15 Oct 2020 Evaluate

The local benchmark -- Nifty witnessed heavy selling pressure on Thursday and ended the day’s trade with the cut of over two percent. Earlier, market start the day on cautious note with Chief Economic Adviser K V Subramanian’s statement that there will be a temporary impact on investment flow to start-ups due to the curbs imposed by the government to stop opportunistic takeover by firms from countries with which India has border tensions. Further, market extended its free fall with the International Monetary Fund (IMF) statement that India's public debt ratio, which remarkably remained stable at around 70 per cent of the GDP since 1991, is likely to jump by 17 percentage points to nearly 90 per cent because of increase in public spending due to COVID-19. Director of the IMF's Fiscal Affairs Department said ‘in our projections, the increase in public spending, in response to COVID-19, and the fall in tax revenues and economic activity, will make public debt jump up by 17 percentage points to almost 90 per cent of GDP’.

Afterwards, index traded in deep under water with private report that bank credit growth, on a year-on-year (y-o-y) basis, decelerated for the sixth successive quarter and stood at 5.7 percent in June, 2020. Of this, industrial credit contracted by 0.6 percent in June 2020, y-o-y, and its share in overall credit declined to 30.8 percent from 32.8 percent a year ago; credit to household sector, on the other hand, increased by 9 percent y-o-y, and its share in the total credit rose to 50.2 percent from 48.7 percent a year ago. Finally, Nifty ended stressful day below its 11700 mark.

All the sectoral indices ended in red. The top gainers from the F&O segment were Petronet LNG, Mahanagar Gas and Cummins India. On the other hand, the top losers were Mindtree, Bandhan Bank and Vodafone Idea. In the index option segment, maximum OI continues to be seen in the 12,000 - 12,700 calls and 10,000 - 10,900 puts indicating this is the trading range expectation.


India Volatility Index (VIX), a gauge for market’s short term expectation of volatility increased by 9.14% and reached 22.06.The 50 share Nifty down by 290.70 points or 2.43% to settle at 11,680.35.

Nifty October 2020 futures closed at 11675.00 (LTP) on Thursday, at a discount of 5.35 points over spot closing of 11680.35, while Nifty November 2020 futures ended at 11701.65 (LTP), at a premium of 21.30 points over spot closing.  Nifty October futures saw an addition of 11,176 units, taking the total open interest (Contracts) to 1,62,121. The near month derivatives contract will expire on October 29, 2020 (Provisional).

From the most active contracts, Infosys October 2020 futures traded at a discount of 8.40 points at 1104.85 (LTP) compared with spot closing of 1113.25. The numbers of contracts traded were 54,805(Provisional).

Reliance Industries October 2020 futures traded at a premium of 6.45 points at 2209.70 (LTP) compared with spot closing of 2203.25. The numbers of contracts traded were 30,337 (Provisional).

ICICI Bank October 2020 futures traded at a premium of 1.40 points at 391.65 (LTP) compared with spot closing of 390.25. The numbers of contracts traded were 29,388 (Provisional).

Bajaj Finance October 2020 futures traded at a discount of 3.00 points at 3201.00 (LTP) compared with spot closing of 3204.00. The numbers of contracts traded were 27,265 (Provisional).

SBIN October 2020 futures traded flat with spot closing of 192.80. The numbers of contracts traded were 26,731 (Provisional).

Among, Nifty calls, 12000 SP from the October month expiry was the most active call with an addition of 8,682 units open interests. Among Nifty puts, 11700 SP from the October month expiry was the most active put with a contraction of 5,451units open interests. The maximum OI outstanding for Calls was at 12500 SP (32,440 units) and that for Puts was at 10500 SP (45,343 units). The respective Support and Resistance levels of Nifty are: Resistance 11,916.77 --Pivot Point 11,789.03 -- Support -- 11,552.62.

The Nifty Put Call Ratio (PCR) finally stood at (1.36) for October month contract. The top five scrips with highest PCR on Indusind Bank (0.82), HDFC (0.80), Hero Motocorp (0.74), TCS (0.73) and Axis Bank (0.72).

Among most active underlying, Infosys witnessed an addition of 118 units of Open Interest in the October month futures contract followed by Reliance Industries witnessed an addition of 1,791 units of Open Interest in the October month futures contract, Bajaj Finance witnessed an addition of 1,858 units of Open Interest in the October month futures contract, HCL Technologies witnessed an addition of 277 units of Open Interest in the October month futures contract and Bharti Airtel witnessed an addition of 860 units of Open Interest in the October month futures contract (Provisional).

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