Nifty snaps two days winning streak; ends below 8,600 mark

Snapping its two days winning streak, Indian benchmark index --Nifty-- finished the session on negative territory on Tuesday as investors booked profits ahead of the policy meetings of global central banks. Sentiments remained subdued with the report stating that structural issues in the inflation dynamics continue to prevail as rural CPI inflation on an average remains above the urban CPI inflation. Besides, weakness in rupee against dollar, disappointing Q1 numbers by some blue-chip firms and mixed global cues also kept investors on edge. However, losses remained capped with the report that the Minister of State for Finance Arjun Ram Meghwal has said that Government is working overtime to build a consensus on the long-pending Goods and Services Tax bill with the hope of getting it passed during the ongoing Parliament session. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 891 crore on July 25, 2016. Meanwhile, some traders remained on the sidelines and refrained from any new buying activity ahead of the expiry of derivatives contract on July 28, 2016.

On the global front, Asian equity markets ended mostly higher on Tuesday, with Chinese stocks gaining traction as US stocks pulled back after suffering energy stock losses. However, European markets declined in early trades, with investors wading through a slew of corporate updates, including a higher takeover bid for brewer SABMiller PLC and the potential breakdown of a deal involving Italy’s Mediaset SpA that drove its shares down by double digits.

Back home, traders were seen piling position in information technology (IT) and Power stocks while selling was witnessed in Realty, Auto and PSU sector stocks. The top gainers from the F&O segment were Jindal Steel & Power, Bajaj Finance and Hindustan Zinc. On the other hand, the top losers were Unitech, Dr. Reddy's Laboratories and CEAT. In the index options segment, maximum OI was being seen in the 8400-9000 calls and 7500-8600 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 0.62% and reached 15.62. The 50-share Nifty was up by 45.00 points or 0.52% to settle at 8,590.65.

Nifty July 2016 futures closed at 8592.85 on Tuesday at a premium of 2.20 points over spot closing of 8,590.65, while Nifty August 2016 futures ended at 8640.55 at a premium of 49.90 points over spot closing. Nifty July futures saw contraction of 1.09 million (mn) units, taking the total outstanding open interest (OI) to 20.41 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 0.15 points at 226.95 compared with spot closing of 226.80. The number of contracts traded were 22,618.   

Tata Steel July 2016 futures traded at a discount of 7.15 points at 360.25 compared with spot closing of 367.40. The number of contracts traded were 16,621.   

Axis Bank of July 2016 futures traded at a premium of 0.35 points at 552.35 compared with spot closing of 552.00. The number of contracts traded were 22,963.       HDFC Bank July 2016 futures traded at a discount of 0.05 points at 1239.45 compared with spot closing of 1,239.50. The number of contracts traded were 23,992.   

Reliance Industries July 2016 futures traded at a premium of 0.65 points at 1022.90 compared with spot closing of 1,022.25. The number of contracts traded were 25,073.

Among Nifty calls, 8700 SP from the July month expiry was the most active call with an contraction of 0.49 million open interests. Among Nifty puts, 8600 SP from the July month expiry was the most active put with an contraction of 0.15 million open interests. The maximum OI outstanding for Calls was at 8700 SP (5.64 mn) and that for Puts was at 8400 SP (5.02 mn). The respective Support and Resistance levels of Nifty are: Resistance 8631.32--- Pivot Point 8604.23--- Support --- 8563.57.             

The Nifty Put Call Ratio (PCR) finally stood at 1.20 for July month contract. The top five scrips with highest PCR on OI were ULTRACEMCO (1.38), HDFC (1.25), CANBK (1.20), GODREJIND (1.18) and WIPRO (1.16).   

Among most active underlying Maruti Suzuki India  witnessed an contraction of 0.11 million of Open Interest in the July month futures contract, followed Dr. Reddy's Laboratories witnessing an contraction of 0.25 million of Open Interest in the July month contract; State Bank of India witnessed a contraction of 16.95 million of Open Interest in the July month contract, Axis Bank witnessed an contraction of 3.37 million of Open Interest in the July month contract and Reliance Industries India witnessed an contraction of 4.50 million units of Open Interest in the July month's future contract.