Nifty ends lower; RBI monetary policy eyed

The fifty stock index -- Nifty - ended lower on Monday, on the back of losses in frontline blue-chip stocks such as ICICI Bank, State Bank of India, Maruti Suzuki, Bank of Baroda and Axis Bank. Sentiments remained under pressure with the statement of Standard & Poor’s Ratings Services that India will face challenges in sticking to the fiscal consolidation roadmap as the expected revenues may not be fully realised and subsidy cuts may be delayed.  Further, investors remained cautious ahead of ahead of the Reserve Bank of India’s (RBI) monetary policy review tomorrow.

On the global front, Asian markets ended mixed, with major indexes in Japan and South Korea extending gains after the Bank of Japan's (BOJ) surprise move on Friday to adopt negative rates sent stocks higher from Tokyo to New York. European markets were trading lower on Monday erasing earlier gains as a survey showing another fall in China's factory activity and a slide in the oil price weighed on investor sentiment. 

Back home, after getting positive start, Indian benchmark Nifty continued to trade in green for most part of the day, as investors remained optimistic after Indian manufacturing sector growth rose to a four-month high in January driven by rising inflows of new business orders from domestic as well as export clients. The Nikkei India Manufacturing PMI, a composite monthly indicator of manufacturing performance, stood at 51.1 in January, up from 49.1 in December. Some support also came with Finance Minister Arun Jaitley’s statement that the 8% GDP growth can be achieved next fiscal on account of improved rural demand and better monsoon. However, some selling was witnessed in last leg of trade that dragged the market in red and finally ended with marginal loss of over 7 points.

The top gainers from the F&O segment were Kaveri Seed Company, Cadila Healthcare and Amara Raja Batteries.  On the other hand, the top losers were Just Dial, Syndicate Bank and ICICI Bank. In the  index options segment, maximum OI was being seen in the 7500-8000 calls and 7000-7500 puts. In today's session, while the traders preferred to exit 8000 put, heavy buildup was seen in the 7500 put. On the other hand, traders exited from 7400 Call, while 7800 call witnessed considerable OI addition.   

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.77% and reached 17.89. The 50-share Nifty was down by 7.60 points or 0.10% to settle at 7,555.95.   

Nifty February 2016 futures closed 7565.35 on Monday at a premium of 9.40 points over spot closing of 7,555.95, while Nifty March 2016 futures ended at 7579.50 at a premium of 23.55 points over spot closing. Nifty February futures saw addition of 0.69 million (mn) units, taking the total outstanding open interest (OI) to 20.06 million (mn) units. The near month derivatives contract will expire on February 25, 2016.                 

From the most active contracts, SBI February 2016 futures traded at a premium of 0.30 points at 173.20 compared with spot closing of 172.90. The number of contracts traded were 25,509.            

ICICI Bank February 2016 futures traded at a discount of 0.05 points at 217.15 compared with spot closing of 217.20. The number of contracts traded were 21,708.                       

Axis Bank February 2016 futures traded at a premium of 1.85 points at 401.05 compared with spot closing of 399.20. The number of contracts traded were 15,502.                           

Reliance Industries February 2016 futures traded at a premium of 4.20 points at 1032.40 compared with spot closing of 1,028.20. The number of contracts traded were 10,685.            

Bharat Heavy Electricals February 2016 futures traded at a premium of 1.30 points at 140.70 compared with spot closing of 139.40. The number of contracts traded were 9,967. 

Among Nifty calls, 7600 SP from the February month expiry was the most active call with an addition of 0.42 million open interests. Among Nifty puts, 7500 SP from the February month expiry was the most active put with an addition of 0.88 million open interests. The maximum OI outstanding for Calls was at 7600 SP (4.07 mn) and that for Puts was at 7400 SP (4.80 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7590.52 --- Pivot Point 7565.88 --- Support --- 7531.32.        

The Nifty Put Call Ratio (PCR) finally stood at 1.12 for February month contract. The top five scrips with highest PCR on OI were Indian Overseas Bank (1.88), Container Corporation of India (1.14), Yes Bank (1.37), Hero MotoCorp (1.35) and Andhra Bank (1.14). 

Among most active underlying, Yes Bank witnessed an addition of 1.92 million of Open Interest in the February month futures contract, followed by Larsen & Toubro witnessing an addition of 0.56 million of Open Interest in the February month contract; Maruti Suzuki India witnessed an addition of 0.24 million of Open Interest in the February month contract, State Bank of India witnessed an addition of 7.34 million of Open Interest in the February month contract and ICICI Bank witnessed an addition of 6.33 million units of Open Interest in the February  month's future contract.