Nifty ends lower on Mauritius tax treaty woes

The benchmark index -- Nifty has ended lower as market participants turned jittery over foreign fund inflows after the country decided to impose capital gains tax arising in Mauritius from sale of shares in Indian companies starting from April 1, 2017. Further, sentiments were also under pressure with the government stating that drought has affected nearly a quarter of the country's population and has left an impact on over 1.5 lakh villages. Moreover, investors remained cautious ahead of the key macro data -- IIP and CPI numbers due to be unveiled tomorrow.  However, some support came in with Economic Affairs Secretary Shaktikanta Das’ statement that the India continues to be a robust economy and investments will come in because of fundamentals of the economy and because of the strength and resilience of the economy and returns that India offers post tax.

On the global front, Asian markets ended mixed, as oils slumped, ending the enthusiasm attached to Tuesday’s global rallies on stronger crude prices. European markets were trading lower as some weak earnings pushed the markets lower after two previous days of gains. Outdoor advertising group JC Decaux was among the worst-performers.

Back home, after making a gap-down opening, Indian equity benchmark managed to recover all of its initial losses in afternoon trade. Though, recovery proved short-lived and Nifty once again started moving southward to end below its crucial 7,850 level.  The top gainers from the F&O segment were Zee Entertainment Enterprises, Aditya Birla Nuvo and Dish TV India. On the other hand, the top losers were Unitech, Power Finance Corporation and Punjab National Bank. In the index options segment, maximum OI was being seen in the 7800-8500 calls and 7000-7900 puts. In today's session, while the traders preferred to exit 7700 put, heavy buildup was seen in the 7400 put. On the other hand, traders exited from 7800 Call, while 7900 call witnessed considerable OI addition.   

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.34% and reached 16.96. The 50-share Nifty was down by 38.95 points or 0.49% to settle at 7,848.85.   

Nifty May 2016 futures closed at 7865.85 on Wednesday at a premium of 17.00 points over spot closing of 7,848.85, while Nifty June 2016 futures ended at 7878.45 at a premium of 29.60 points over spot closing. Nifty May futures saw contraction of 1.76 million (mn) units, taking the total outstanding open interest (OI) to 16.72 million (mn) units. The near month derivatives contract will expire on May 26, 2016.                           

From the most active contracts, SBI May 2016 futures traded at a discount of 0.35 points at 184.80 compared with spot closing of 185.15. The number of contracts traded were 20,523.                

ICICI Bank May 2016 futures traded at a premium of 0.25 points at 224.35 compared with spot closing of 224.10. The number of contracts traded were 22,178.          

Axis Bank  May 2016 futures traded at a premium of 0.95 points at 498.80 compared with spot closing of 497.85. The number of contracts traded were 24,650. 

Tata Motors May 2016 futures traded at a premium of 1.55 points at 381.55 compared with spot closing of 380.00. The number of contracts traded were 15,258.                

Reliance Industries May 2016 futures traded at a premium of 3.35 points at 977.45 compared with spot closing of 974.10. The number of contracts traded were 11,700.  

Among Nifty calls, 8000 SP from the May month expiry was the most active call with an addition of 0.05 million open interests. Among Nifty puts, 7800 SP from the May month expiry was the most active put with an addition of 0.08 million open interests. The maximum OI outstanding for Calls was at 8000 SP (6.54 mn) and that for Puts was at 7700 SP (5.14 mn). The respective Support and Resistance levels of Nifty are: Resistance 7901.00 --- Pivot Point 7840.95 --- Support --- 7788.80.             

The Nifty Put Call Ratio (PCR) finally stood at 0.90 for May month contract. The top five scrips with highest PCR on OI were Indian Overseas Bank (2.68), Axis Bank (1.25), Indusind Bank (1.21), Zee Entertainment (1.15) and Godrej Consumer Products (1.13).  

Among most active underlying, Axis Bank witnessed an addition of 0.29 million of Open Interest in the May month futures contract, followed Zee Entertainment Enterprises witnessing an addition of 1.17 million of Open Interest in the May month contract; Tata Motors witnessed a contraction of 0.30 million of Open Interest in the May month contract, ICICI Bank witnessed a contraction of 3.67 million of Open Interest in the May month contract and Yes Bank witnessed a contraction of 0.003 million units of Open Interest in the May month's future contract.