Nifty ends lower for 3rd straight day

The domestic equity index -- Nifty -- ended lower on Friday, on account of selling by funds and retail investors in the blue chip stocks such as Lupin, Ambuja Cement and ICICI Bank. Investors’ sentiment turned down after the capital market regulator SEBI tightened its guidelines to check any misuse of P-notes. SEBI had yesterday made rules tougher on controversy-ridden P-Notes, making mandatory for all end-users of these overseas instruments to follow anti-money laundering law in India and asked their issuers to report any suspected breach immediately. Investors’ sentiments were also dampened with worries that US Federal Reserve would raise interest rates as early as June. Adding to these expectations, New York Fed President William Dudley - a permanent voting member of the central bank's rate-setting committee has said that the US economy could be strong enough to warrant a rate increase in June. However, loss remained capped report that with global rating agency Moody's Investors Service, forecasting Indian economy to grow 7.5 percent in the current and next year has said the expansion is primarily driven by rising consumption and sustained improvement in private investment was needed to maintain the momentum. Some support also came in with Indian Meteorological Department’s statement that the monsoon has made its much-awaited entry into the Andaman & Nicobar Islands, though it also said that it may get delayed a bit due to an ongoing cyclonic activity in the Bay of Bengal. On the global front, Asian markets ended mostly higher, as on the back of a bounce in oil prices, but the prospect of higher U.S. interest rates dragged down smaller markets. European markets were trading higher, with UniCredit leading the gainers on talk of possible asset sales.

Back home, after making a positive start, Indian equity benchmark continued to trade in range bound with positive bias for most part of the day’s trade. However, selling which was witnessed in the last leg of trade that dragged the Nifty below its psychological 7,750 level and finally ended with loss of over 33 points. The top gainers from the F&O segment were The Karnataka Bank, Pidilite Industries and Just Dial. On the other hand, the top losers were Lupin, Jet Airways (India) and Torrent Pharmaceuticals. In the index options segment, maximum OI was being seen in the 7800-8300 calls and 7000-7900 puts. In today's session, while the traders preferred to exit 7700 put, heavy buildup was seen in the 7650 put. On the other hand, traders exited from 8200 Call, while 7800 call witnessed considerable OI addition.      

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.74% and reached 16.42. The 50-share Nifty was down by 33.70 points or 0.43% to settle at 7,749.70.   

Nifty May 2016 futures closed at 7763.35 on Friday at a premium of 13.65 points over spot closing of 7,749.70, while Nifty June 2016 futures ended at 7767.95 at a premium of 18.25 points over spot closing. Nifty May futures saw contraction of 0.87 million (mn) units, taking the total outstanding open interest (OI) to 15.62 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 0.05 points at 171.65 compared with spot closing of 171.70. The number of contracts traded were 18,226.                

ICICI Bank May 2016 futures traded at a premium of 0.75 points at 220.80 compared with spot closing of 220.05. The number of contracts traded were 17,243.          

Adani Ports and Special Economic Zone May 2016 futures traded at a premium of 0.30 points at 178.20 compared with spot closing of 177.90. The number of contracts traded were 10,259.  

ITC May 2016 futures traded at a discount of 7.25 points at 330.75 compared with spot closing of 338.00. The number of contracts traded were 20,486.                

Reliance Industries May 2016 futures traded at a premium of 3.95 points at 937.35 compared with spot closing of 933.40. The number of contracts traded were 19,859.        

Among Nifty calls, 7900 SP from the May month expiry was the most active call with an addition of 0.32 million open interests. Among Nifty puts, 7800 SP from the May month expiry was the most active put with a contraction of 0.13 million open interests. The maximum OI outstanding for Calls was at 8000 SP (9.47 mn) and that for Puts was at 7700 SP (5.20 mn). The respective Support and Resistance levels of Nifty are: Resistance 7796.15 --- Pivot Point 7765.95 --- Support --- 7719.50.             

The Nifty Put Call Ratio (PCR) finally stood at 0.76 for May month contract. The top five scrips with highest PCR on OI were Indusind Bank (1.50), Indiabulls Real Estate (1.42), UCO Bank (1.07), Container Corporation of India (1.05) and Maruti Suzuki India (1.05).  

Among most active underlying, Lupin witnessed a contraction of 0.02 million of Open Interest in the May month futures contract, followed Reliance Industries witnessing a contraction of 0.19 million of Open Interest in the May month contract; ITC witnessed an addition of 0.84 million of Open Interest in the May month contract, State Bank of India witnessed a contraction of 0.69 million of Open Interest in the May month contract and ICICI Bank witnessed a contraction of 2.45 million units of Open Interest in the May month's future contract.