Nifty trims losses; ends below 8550 mark

Nifty ended lower on Friday as TCS and Infosys fell sharply after unveiling their quarterly earnings. Tata Consultancy Services lost 3% after giving a cautious commentary, while Infosys fell as much as 9% after revising its FY17 revenue dollar guidance on the lower side. Infosys expects FY17 revenue to grow at a slower pace between 10.5 percent and 12 percent in constant currency versus its previous estimate of 11.5-13.5 percent. Market participants also turned cautious ahead of another major result announcement of Reliance Industries, as the company is expected to report a modest profit growth, while the income is likely to fall marginally, impacted by a planned refinery shut down and lower refining margins. However, losses remained capped with the report that Monsoon rains in India were 11 percent above average in the week ended July 13, 2016. The monsoon rains covered the entire country, cheering farmers planting crops such as rice, soybeans, cotton and pulses in the summer sowing season that starts in June. 

On the global front, Asian markets ended mostly in green on Friday as better-than-expected Chinese economic data helped outweigh news of a horrific terrorist attack in Nice, France. However, European stocks were trading lower weighed by a terror attack carried out by using a heavy truck in the southern French city of Nice that killed at least 80 people.  Back home, after getting a positive start, Nifty showed some strength in early trade, but the sentiments turned pessimistic in mid-morning trade and index start drifting lower, after IT major Infosys posted lower-than-expected dollar revenue growth in the first quarter and lower guidance of constant currency revenue growth in FY17. Besides, weak trend in European stocks coupled with depreciation in rupee value against the US dollar also weighed on the sentiment. However, mild short covering in late afternoon session helped Nifty to ease some of its losses. Finally, Nifty ended below its crucial 8,550 mark with a cut of over a quarter percent.

Traders were seen piling position in Auto, Metal and Banking stocks, while selling was witnessed in IT, TECK and Power sector stocks. The top gainers from the F&O segment were LIC Housing Finance, Tata Steel and Bharti Airtel. On the other hand, the top losers were Infosys, NIIT Technologies and Jubilant Foodworks. In the index options segment, maximum OI was being seen in the 8300-8900 calls and 7800-8800 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.18% and reached 15.63. The 50-share Nifty was down by 23.60 points or 0.28% to settle at 8,541.40.

Nifty July 2016 futures closed at 8554.85 on friday  at a premium of 13.45 points over spot closing of 8,541.40, while Nifty August 2016 futures ended at 8591.25 at a premium of 49.85 points over spot closing. Nifty July futures saw addition of 0.45 million (mn) units, taking the total outstanding open interest (OI) to 22.51 million (mn) units. The near month derivatives contract will expire on July 28, 2016.                                

From the most active contracts, State bank of India July 2016 futures traded at a premium of 0.40 points at 231.50 compared with spot closing of 231.10. The number of contracts traded were 17,161.   

Punjab National Bank of July 2016 futures traded at a discount of 0.95 points at 135.45 compared with spot closing of 136.40. The number of contracts traded were 12,987.    

Bank of Baroda July 2016 futures traded at a premium of 1.20 points at 165.00 compared with spot closing of 163.80. The number of contracts traded were 13,266.             

Tata Steel July 2016 futures traded at a discount of 6.35 points at 365.85 compared with spot closing of 372.20. The number of contracts traded were 21,992.   

Axis Bank July 2016 futures traded at a premium of 0.60 points at 565.85 compared with spot closing of 565.25. The number of contracts traded were 12,477. 

Among Nifty calls, 8600 SP from the July month expiry was the most active call with an addition of 0.41 million open interests. Among Nifty puts, 8500 SP from the July month expiry was the most active put with a contraction of 0.26 million open interests. The maximum OI outstanding for Calls was at 8700 SP (5.27 mn) and that for Puts was at 8400 SP (5.68 mn). The respective Support and Resistance levels of Nifty are: Resistance 8587.45--- Pivot Point 8548.75--- Support --- 8502.70.

The Nifty Put Call Ratio (PCR) finally stood at 1.14 for July month contract. The top five scrips with highest PCR on OI were HDFC (1.66), Maruti Suzuki India (1.35), JSW Steel (1.25), Canara Bank (1.17) and Hero MotoCorp (1.16). 

Among most active underlying Infosys witnessed an addition of 4.48 million of Open Interest in the July month futures contract, followed Tata Consultancy Services witnessing an addition of 0.57 million of Open Interest in the July month contract; Tata Steel witnessed an addition of 0.19 million of Open Interest in the July month contract, Reliance Industries  witnessed a contraction of 0.32 million of Open Interest in the July month contract and LIC Housing Finance witnessed an addition of 0.05 million units of Open Interest in the July month's future contract.