Nifty cracks 2% as Brexit spooks world markets

Domestic equity index -- Nifty ended lower over two percent on Friday on the back of sustained selling by investors in blue chips counters, tracking a meltdown in global stocks after Britain in a historic referendum voted to exit the European Union. Fears are also growing that other EU members too will push for referendums, posing the biggest threat to the future of grouping since its inception almost 60 years ago. Sentiment also remained down beat with India Meteorological Department’s report that the monsoon rains in India were 4% below average in the week ending June 22, 2016, narrowing the deficit since the season started on June 8. The June-September monsoon rains have remained 18% low so far. However, market managed to trim some of their losses as Economic Affairs Secretary Shaktikanta Das downplayed the fears and stated that Britain's decision to move out of the 28-member European Union (EU) won't significantly impact India's trade. The secretary stated that both import and export are not going to be impacted significantly and will be very marginal. Investors' sentiment was echoed by some private reports that India stood as a bright spot with global investors betting on the nation's strong economic fundamentals.

On the global front, Asian markets ended lower, as Britain voted to leave the European Union in a shock referendum result, with the value of the pound falling to its lowest level against the U.S. dollar since 1985. Following above tandem, European markets were trading deeply lower, with France's CAC was down by 7.91%, Germany's DAX was down by 6.77% and UK's FTSE 100 was down by 4.49%.

Back home, after making gap down opening, Indian equity benchmark extended its losses in first half of trade. Thereafter, market managed to cut some of their losses but ended the session with cut of over 180 points. The top gainers from the F&O segment were Punjab National Bank, Aditya Birla Nuvo and Allahabad Bank. On the other hand, the top losers were Jaiprakash Associates, Motherson Sumi Systems and Tata Motors. In the index options segment, maximum OI was being seen in the 8100-8500 calls and 7000-8200 puts. In today's session, while the traders preferred to exit 8100 put, heavy buildup was seen in the 7300 put. On the other hand, traders exited from 8400 Call, while 8100 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.37% and reached 18.62. The 50-share Nifty was down by 181.85 points or 2.20% to settle at 8,088.60.    

Nifty June 2016 futures closed at 8086.90 on Friday at a discount of 1.70 points over spot closing of 8,088.60, while Nifty July 2016 futures ended at 8118.35 at a premium of 29.75 points over spot closing.  Nifty June futures saw contraction of 0.24 million (mn) units, taking the total outstanding open interest (OI) to 15.88 million (mn) units. The near month derivatives contract will expire on June 30, 2016.                               

From the most active contracts, State Bank of India June 2016 futures traded at a premium of 0.65 points at 211.65 compared with spot closing of 211.00. The number of contracts traded were 55,919. 

ICICI Bank June 2016 futures traded flat compared with spot closing of 231.40. The number of contracts traded were 30,977.                   

Axis Bank June 2016 futures traded at a premium of 1.40 points at 510.40 compared with spot closing of 509.00. The number of contracts traded were 23,909.           

Tata Motors June 2016 futures traded at a premium of 3.00 points at 450.70 compared with spot closing of 447.70. The number of contracts traded were 51,346.  

Reliance Industries June 2016 futures traded at a premium of 2.40 points at 950.95 compared with spot closing of 948.55. The number of contracts traded were 22,715. 

Among Nifty calls, 8100 SP from the June month expiry was the most active call with an addition of 2.04 million open interests. Among Nifty puts, 8000 SP from the June month expiry was the most active put with a contraction of 1.46 million open interests. The maximum OI outstanding for Calls was at 8400 SP (5.51 mn) and that for Puts was at 8000 SP (6.58 mn). The respective Support and Resistance levels of Nifty are: Resistance 8150.52 --- Pivot Point 8038.78 --- Support --- 7976.87.             

The Nifty Put Call Ratio (PCR) finally stood at 1.22 for June month contract. The top five scrips with highest PCR on OI were Indusind Bank (1.42), Hindalco (1.24), Apollo Hospital (1.22), Indo Count Industries (1.21) and Container Corporation of India (1.14). 

Among most active underlying, Tata Motors  witnessed an addition of 0.53 million of Open Interest in the June month futures contract, followed State Bank of India witnessing a contraction of 3.66 million of Open Interest in the June month contract; Yes Bank witnessed an addition of 1.08 million of Open Interest in the June month contract, Tata Steel witnessed an addition of 1.05 million of Open Interest in the June month contract and Reliance Industries witnessed a contraction of 0.92 million units of Open Interest in the June month's future contract.