Nifty ends lower for 4th straight day

Domestic equity index -- Nifty -- ended lower amid volatile trades on the back of profit booking by fund s and retail investors in the front line blue chips counters. Investor’s sentiment remained cautious ahead of expiry of May derivative contracts due on Thursday. Further, Prospects of early interest rate hike by the US Federal Reserve in June and slip in crude oil prices also hurt market participant sentiment. Moreover, investors remained concerned with Reserve Bank of India (RBI) Governor Raghuram Rajan’s statement that India should restrain itself from being “too ambitious” at a time when the world is full of uncertainties and instead focus on sensible policies to ensure a sustainable economic growth. Rajan has also said that Indian economy has certainly picked up pace in growth, but certain sectors are still under stress, making the economic recovery uneven. However, losses remained capped with private report that India’s net FDI flows are expected to rise further this fiscal to $38 billion on emergence of some ‘positive signs’ such as regulatory easing in select sectors and reform measures initiated by the government. Net FDI flows in 2015-2016 stood at around $36 billion as against $31 billion for 2014-2015. Further, stellar rally in ITC shares, rupee rallied on increased selling of the US currency by exporters and banks, too supported investors’ sentiment.

On the global front, Asian markets ended mostly higher, after a solid session on Wall Street, while the dollar moved away from recent highs though remained supported as investors bet that the US Federal Reserve was on track to raise rates sooner rather than later. However, European markets were trading lower with France’s CAC was down by 0.96%, Germany’s DAX was down by 0.80% and UK’s FTSE 100 was down by 0.32%.

Back home, after making a gap up opening, Indian equity benchmark has pared its initial gain and entered into negative territory in noon session for short period of time. Thereafter, market once again witnessed gaining mountain and recaptured its psychological 8000 levels. However, profit booking by market participants in last half -hour of trade that dragged market into red. Finally, Nifty ended with cut of over 18 points.  The top gainers from the F&O segment were The ITC, Shriram Transport Finance Company and Biocon. On the other hand, the top losers were Lupin, Tata Steel and Oil & Natural Gas Corporation. In the index options segment, maximum OI was being seen in the 7700-8500 calls and 7000-7900 puts. In today's session, while the traders preferred to exit 7800 put, heavy buildup was seen in the 7650 put. On the other hand, traders exited from 7900 Call, while 7750 call witnessed considerable OI addition.   

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.61% and reached 16.16. The 50-share Nifty was down by 18.65 points or 0.24% to settle at 7,731.05.   

Nifty May 2016 futures closed at 7744.85 on Monday at a premium of 13.80 points over spot closing of 7,731.05, while Nifty June 2016 futures ended at 7750.90 at a premium of 19.85 points over spot closing. Nifty May futures saw contraction of 1.00 million (mn) units, taking the total outstanding open interest (OI) to 14.61 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 premium of 0.35 points at 168.80 compared with spot closing of 168.45. The number of contracts traded were 22,220.                

ICICI Bank May 2016 futures traded at a premium of 0.65 points at 221.40 compared with spot closing of 220.75. The number of contracts traded were 20,572.          

ITC May 2016 futures traded at a premium of 0.40 points at 347.65 compared with spot closing of 347.35. The number of contracts traded were 30,643.  

Reliance Industries May 2016 futures traded at a discount of 2.15 points at 933.25 compared with spot closing of 931.10. The number of contracts traded were 22,108.                

HDFC Bank May 2016 futures traded at a premium of 4.00 points at 1138.90 compared with spot closing of 1,134.90. The number of contracts traded were 21,047.

Among Nifty calls, 7800 SP from the May month expiry was the most active call with an addition of 0.85 million open interests. Among Nifty puts, 7700 SP from the May month expiry was the most active put with an addition of 0.005 million open interests. The maximum OI outstanding for Calls was at 8000 SP (8.83 mn) and that for Puts was at 7700 SP (5.20 mn). The respective Support and Resistance levels of Nifty are: Resistance 7793.70 --- Pivot Point 7757.95 --- Support --- 7695.30.             

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 Indiabulls Real Estate (1.33), Indusind Bank (1.32), ITC (1.13), Bharti Infratel of India (1.07) and Axis bank (1.05).  

Among most active underlying, ITC witnessed a contraction of 4.03 million of Open Interest in the May month futures contract, followed Reliance Industries witnessing a contraction of 3.50 million of Open Interest in the May month contract; State Bank of India witnessed a contraction of 7.44 million of Open Interest in the May month contract, HDFC Bank witnessed a contraction of 6.03 million of Open Interest in the May month contract and Tata Steel witnessed a contraction of 2.87 million units of Open Interest in the May month's future contract.