Nifty ends lower ahead of Derivatives Expiry

The fifty stock index -- Nifty -- ended on a flat note with negative bias on Monday after swinging between minor gains and losses for most of the trading session as investors turned cautious ahead of the expiry of derivative contracts in a holiday-shortened week. Sentiments remained downbeat with the Standard & Poor's statement that India's rating could come under stress if government fails to pursue reforms agenda and overshoots fiscal deficit target. On the global front, Asian markets ended mostly in red, following a rally on Wall Street last week as investors continue to look out for comments from central bankers on the trajectory of U.S. monetary policy. Shares of Chinese banks and brokerages all closed lower after China's onshore yuan fell to its lowest level against the dollar since August as offshore yuan continued to decline. Further, European shares opened lower on Monday, dragged down by a steep fall in commodities and energy stocks on demand fears.

Back home, after getting a weak start, Indian benchmark Nifty showed some strength in morning trades however, it failed to breach the fifty point range for most part of the day, ending the session above its crucial 7,850 mark with a slight cut of seven points or 0.09 percent. Sentiments remained subdued on reports that overseas investors have pulled out more than $1billion from the Indian capital markets since the beginning of the month due to lacklustre quarterly earnings and concerns over a possible rate hike by the US Federal Reserve. Depreciation in Indian rupee against dollar also weighed down sentiments.  The rupee depreciated by 11 paise to 66.30 against the US dollar in early trade due to appreciation in the US currency overseas. However, market participants got some relief with former governor of RBI C Rangarajan’s statement that Indian economy will slightly perform better this year as the productivity level of capital may remain high. On the sectroal front, Metal stocks witnessed highest selling pressure due to fall in commodity prices across the globe. However, oil & gas stocks rallied after Qatar agreed to waive $ 1 billion penalty on India for breaking a long-term LNG contract, and has also consented to change the pricing formula to reflect the slump in global energy rates. Auto shares too continued witnessing strong buying following the seventh pay panel's better-than-expected recommended hike.

Going forward, the market will closely watch the winter session of Parliament, beginning this week, which sets the agenda of the government. NDA's recent reverses in Bihar elections have put a cloud over the pace of reforms, and market participants fear that it won't be smooth sailing in Parliament. 

The top gainers from the F&O segment were Petronet LNG, GAIL (India) and Indiabulls Housing Finance. On the other hand, the top losers were Jindal Steel & Power, Hindalco Industries and UPL. In the index options segment, maximum OI was being seen in the 8000-8300 calls and 7500-7900 puts. In today's session, while the traders preferred to exit 7900 put, heavy buildup was seen in the 7800 put. On the other hand, traders exited from 8300 Call, while 8000 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 7.41% and reached 17.07. The 50-share Nifty was down by 7.30 points or 0.09% to settle at 7,849.25. 

Nifty November 2015 futures closed at 7851.25 on Monday at a premium of 2.00 points over spot closing of 7,849.25, while Nifty December 2015 futures ended at 7885.45 at a premium of 36.20 points over spot closing. Nifty November futures saw contraction of 0.20 million (mn) units, taking the total outstanding open interest (OI) to 13.77 million (mn) units. The near month derivatives contract will expire on November 26, 2015.  

From the most active contracts, ICICI Bank November 2015 futures traded at a discount of 0.10 points at 265.55 compared with spot closing of 265.65. The number of contracts traded were 16,194.      

SBI Bank November 2015 futures traded at a premium of 0.45 points at 243.05 compared with spot closing of 242.60. The number of contracts traded were 24,764.          

Axis Bank November 2015 futures traded at a premium of 1.35 points at 463.75 compared with spot closing of 462.40. The number of contracts traded were 19,131.    

HDFC November 2015 futures traded at a discount of 1.25 points at 1065.25 compared with spot closing of 1,066.50. The number of contracts traded were 19,306.        

Reliance November 2015 futures traded at a discount of 2.65 points at 953.65 compared with spot closing of 956.30. The number of contracts traded were 29,000.     

Among Nifty calls, 7900 SP from the November month expiry was the most active call with an addition of 0.67 million open interests.  Among Nifty puts, 7800 SP from the November month expiry was the most active put with an addition of 0.16 million open interests. The maximum OI outstanding for Calls was at 8000 SP (6.56 mn) and that for Puts was at 7700 SP (4.87 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7876.10 --- Pivot Point 7850.65 --- Support --- 7823.80.

The Nifty Put Call Ratio (PCR) finally stood at 0.76 for November month contract.  The top five scrips with highest PCR on OI were Titan Company (1.87), STAR (1.55), Gail (1.47), BEML (1.33) and M&M (1.32).   

Among most active underlying, Reliance Industries witnessed a contraction of 8.32 million of Open Interest in the November month futures contract, followed by Maruti Suzuki India witnessing a contraction of 0.30 million of Open Interest in the November month contract; State Bank of India witnessed a contraction of 17.91 million of Open Interest in the November month contract, HDFC Bank witnessed a contraction of 6.29 million of Open Interest in the November month contract and Axis Bank witnessed a contraction of 8.48 million units of Open Interest in the November month's future contract.