Nifty ends lower ahead of Rail budget

The fifty stock index - Nifty - ended lower over one per cent as investors held off from taking big bets ahead of the rail budget  and derivatives F&O expiry on Thursday. Sentiments remained weak since morning with Moody's Investors Service’s statement that India's fiscal metrics will remain weaker than its peers in the near term even if Finance Minister Arun Jaitley was to stick to fiscal consolidation roadmap. It said that the government's fiscal deficits have reduced over the last five years, and this has supported the stabilisation of government debt ratios. Without fiscal consolidation going forward, India's government finances will continue to compare poorly to peers. Meanwhile, industry body the Federation of Indian Chambers of Commerce and Industry (FICCI), has said that the Indian economy is expected to grow at 7.4 percent in the current fiscal, slightly lower than 7.6 percent projected in advance estimates of Central Statistics Office (CSO).  After getting a gap down opening, Indian equity benchmark continued to reel under pressure throughout the session and ended with a cut of over 90 points.     

On the global front, Asian markets ended mostly in red, as hopes for a coordinated production cut by OPEC faded and investors fretted over additional pressure on bank earnings in 2016. European shares edged lower weighed down by commodity stocks after base metal prices eased while energy shares weakened tracking fall in crude oil prices.

The top gainers from the F&O segment were Bharat Petroleum Corporation, GMR Infrastructure and Unitech. On the other hand, the top losers were Aurobindo Pharma, Bharat Heavy Electricals and Divi's Laboratories. In the index options segment, maximum OI was being seen in the 7000-8000 calls and 6800-7200 puts. In today's session, while the traders preferred to exit 7100 put, heavy buildup was seen in the 7000 put. On the other hand, traders exited from 7300 Call, while 7100 call witnessed considerable OI addition.  

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.70% and reached 22.95. The 50-share Nifty was down by 90.85 points or 1.28% to settle at 7,018.70.   

Nifty February 2016 futures closed 7019.05 on Wednesday at a premium of 0.35 points over spot closing of 7,018.70, while Nifty March 2016 futures ended at 7041.65 at a premium of 22.95 points over spot closing. Nifty February futures saw contraction of 2.98 million (mn) units, taking the total outstanding open interest (OI) to 11.34 million (mn) units. The near month derivatives contract will expire on February 25, 2016.                    

From the most active contracts, ICICI Bank February 2016 futures traded at a premium of 0.20 points at 187.20 compared with spot closing of 187.00. The number of contracts traded were 26,165.            

SBI February 2016 futures traded at a discount of 0.10 points at 156.55 compared with spot closing of 156.65. The number of contracts traded were 29,896.                      

Axis Bank February 2016 futures traded at a discount of 1.65 points at 386.35 compared with spot closing of 388.00. The number of contracts traded were 23,319.                                                

Reliance Industries February 2016 futures traded at a discount of 2.40 points at 952.60 compared with spot closing of 955.00. The number of contracts traded were 19,369.                     

HDFC Bank February 2016 futures traded at a discount of 2.85 points at 947.15 compared with spot closing of 950.00. The number of contracts traded were 18,629.    

Among Nifty calls, 7100 SP from the January month expiry was the most active call with an addition of 2.10 million open interests. Among Nifty puts, 7000 SP from the January month expiry was the most active put with an addition of 1.78 million open interests. The maximum OI outstanding for Calls was at 7200 SP (6.41 mn) and that for Puts was at 7000 SP (6.96 mn). The respective Support and Resistance levels of Nifty are: Resistance 7069.75 --- Pivot Point 7039.75 --- Support --- 6988.70.            

The Nifty Put Call Ratio (PCR) finally stood at 0.62 for January month contract. The top five scrips with highest PCR on OI were Oil India (2.75), Hero MotoCorp (2.17), Eicher Motors (1.84), Hindustan Zink (1.45) and JSW Steel (1.45). 

Among most active underlying, State Bank of India witnessed a contraction of 11.67 million of Open Interest in the January month futures contract, followed by Reliance Industries witnessing a contraction of 4.59 million of Open Interest in the January month contract; Yes Bank witnessed a contraction of 2.77 million of Open Interest in the January month contract, Axis Bank witnessed a contraction of 5.47 million of Open Interest in the January month contract and ICICI Bank witnessed a contraction of 9.28 million units of Open Interest in the January month's future contract.