Profit booking in late trade drags Nifty lower

Erasing all its initial gains, the Indian benchmark -- Nifty -- ended in red on Thursday. Profit booking which took place in last leg of trade mainly dragged the market below its neutral line. After a positive start, market held their gains and traded in a narrow range throughout the session, as investors got some support with RBI Governor Urjit Patel signaling a marked departure in policy approach from his predecessor’s unwavering focus on price stability. He said that the NPA situation is an important issue for the RBI in India. We will be dealing with it with firmness but also with pragmatism so that the economy does not feel any lack of credit. However, heavy selling pressure witness in late afternoon session and market entered into red terrain to touch intraday day lows, with the International Monetary Fund’s (IMF) report that countries such as India have taken steps to reduce non-performing loans, but stressed that additional and more timely actions is needed. The IMF report also warned of rising medium-term risks and said global financial stability will now depend on how well financial institutions adapt to the new era of low growth and low interest rates. Market participants failed to get any sense of relief with the Arun Jaitley’s statement that India strongly supports the capital increase in the World Bank but the country’s readiness to take a larger share in the global lender than the dynamic formula. Investors also remained on sidelines ahead of US non-farm payrolls report on Friday and June-quarter corporate results starting next week. Finally, Nifty snapped the session with a cut of over thirty points

On the global front, European equity benchmarks were trading choppy on worries that the European Central Bank might wind down the pace of bond-buying before the end of its asset-purchase programme. Asian markets ended mostly in green on Thursday, as a healthy US economic report and rising oil prices overnight bolstered investor optimism.

The top gainers from the F&O segment were Indian Oil Corporation, NMDC and Hindustan Petroleum Corporation. On the other hand, the top losers were Indiabulls Real Estate, Jindal Steel & Power and HDIL. In the index options segment, maximum OI was being seen in the 8700-9000 calls and 8600-8800 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 0.60% and reached 14.83. The 50-share Nifty was down by 34.40 points or 0.39% to settle at 8,709.55

Nifty October 2016 futures closed at 8731.35 on Thursday at a premium of 21.80 points over spot closing of 8,709.55, while Nifty November 2016 futures ended at 8771.95 at a premium of 62.40 points over spot closing. Nifty September futures saw contraction of 0.20 million (mn) units, taking the total outstanding open interest (OI) to 22.08 million (mn) units. The near month derivatives contract will expire on October 27, 2016.

From the most active contracts, State Bank of India October 2016 futures traded at a premium of 0.05 points at 257.30 compared with spot closing of 257.25. The numbers of contracts traded were 14,670.

Vedanta October 2016 futures traded at a discount of 0.05 points at 197.85 compared with spot closing of 197.90. The numbers of contracts traded were 14,388.

Axis Bank October 2016 futures traded at a premium of 1.15 points at 534.65 compared with spot closing of 533.50. The numbers of contracts traded were 16,803.

Tata Motors October 2016 futures traded at a premium of 0.75 points at 552.50 compared with spot closing of 551.75. The numbers of contracts traded were 11,004.   

Tata Steel October 2016 futures traded at a discount of 0.60 points at 390.45 compared with spot closing of 391.05. The numbers of contracts traded were 13,157.   

Among Nifty calls, 8800 SP from the October month expiry was the most active call with a addition of 0.21 million open interests. Among Nifty puts, 8700 SP from the October month expiry was the most active put with an addition of 0.04 million open interests. The maximum OI outstanding for Calls was at 9000 SP (6.09 mn) and that for Puts was at 8600 SP (4.27 mn). The respective Support and Resistance levels of Nifty are: Resistance 8765.58--- Pivot Point 8725.12--- Support --- 8669.08.             

The Nifty Put Call Ratio (PCR) finally stood at 1.03 for October month contract. The top five scrips with highest PCR on OI were MRF (2.00), OFSS (2.00), APOLLOHOSP (1.88), MARUTI (1.23) and GRASIM (1.16).   

Among most active underlying Yes Bank witnessed an contraction of 0.30 million of Open Interest in the October month futures contract, followed Vedanta witnessing an contraction of 1.03 million of Open Interest in the October month contract, Reliance Industries witnessed a addition  of 0.38 million of Open Interest in the October month contract, SBI witnessed an contraction  of 1.59 million of Open Interest in the October month contract and Axis Bank witnessed an addition  of 0.91 million units of Open Interest in the October month's future contract.