Nifty extends southward journey for second straight session; closes below 8,150 level

The fifty stock index -- Nifty -- continued its southbound journey for second consecutive day on Tuesday and ended in deep red with a massive cut of over two percent, breaching its crucial 8,150 mark on continued foreign fund outflows and weakness in emerging market currencies against the dollar since Donald Trump's unexpected win in the US presidential election on November 8, 2016. Foreign institutional investors were sellers in equities worth over Rs 4,000 crore in the past three trading sessions. Sentiment also weighed down by the government’s move last week to withdraw high-value currency notes and disappointing quarterly earnings by some more blue-chip companies. Many agencies criticizing the government over demonetisation of Rs 500 and Rs 1,000 notes, saying the move has led to 'financial chaos' across the country as well as condemning that the decision was taken without proper planning or preparation. Also, the sudden decline in money supply and simultaneous rise in bank deposits post demonetisation is going to adversely impact consumption in the economy in the short term and may lead to a lower GDP growth. The boardroom battle in the Tata Group hurt shares of almost all the companies in the group and weighed on the market as well.

Global cues too dampened sentiments with Asian equity markets ending mostly lower on Tuesday on a rising dollar, falling oil prices and the extended weakness of the yuan that kept underlying sentiments somewhat cautious. Back home, traders were seen some lower level buying in IT stocks, while sharp selling was witnessed in Realty, Auto and Metal sector stocks. The top gainers from the F&O segment were Bank of Baroda, Dish TV India and Bharat Forge. On the other hand, the top losers were PC Jeweller, DCB Bank and Jain Irrigation Systems. In the index options segment, maximum OI was being seen in the 8300-9000 calls and 8200-8500 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility addition by 16.01% and reached 20.14. The 50-share Nifty was down by 187.85 points or 2.26% to settle at 8,108.45.

Nifty November 2016 futures closed at 8,139.55 on Tuesday at a premium of 31.1 points over spot closing of 8,108.45, while Nifty December 2016 futures ended at 8,191.65 at a premium of 83.2 points over spot closing. Nifty November futures saw addition of 2.01 million (mn) units, taking the total outstanding open interest (OI) to 19.53 million (mn) units. The near month derivatives contract will expire on November 24, 2016.

From the most active contracts, ICICI Bank November 2016 futures traded at a discount of 0.05 points at 270.60 compared with spot closing of 270.65. The numbers of contracts traded were 19,994.

State Bank of India November 2016 futures traded at a premium of 0.90 points at 278.90 compared with spot closing of 278.00. The numbers of contracts traded were 33,802.

Bank of Baroda November 2016 futures traded at a premium of 1.00 points at 174.90 compared with spot closing of 173.90. The numbers of contracts traded were 28,743.

Hindalco Industries November 2016 futures traded at a premium of 0.10 points at 168.50 compared with spot closing of 168.40. The numbers of contracts traded were 21,342.

Axis Bank November 2016 futures traded at a premium of 1.15 points at 481.20 compared with spot closing of 480.05. The numbers of contracts traded were 17,009.     Among Nifty calls, 8300 SP from the November month expiry was the most active call with a addition of 2.11 million open interests. Among Nifty puts, 8200 SP from the November month expiry was the most active put with a contraction of 0.06 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.54 mn) and that for Puts was at 8200 SP (4.22 mn). The respective Support and Resistance levels of Nifty are: Resistance 8233.60 --- Pivot Point 8163.40 --- Support --- 8038.25.             

The Nifty Put Call Ratio (PCR) finally stood at 0.63 for November month contract. The top five scrips with highest PCR on OI were UBL (0.78), Cummins India (0.89), JSW Steel (0.88), Oil India (0.82) and Larsen & Toubro (0.78).   

Among most active underlying State Bank of India witnessed an addition of 4.53 million of Open Interest in the November month futures contract, followed Tata Motors witnessing an addition of 0.21 million of Open Interest in the November month contract, Vedanta witnessed a contraction of 5.16 million of Open Interest in the November month contract, Maruti Suzuki India witnessed an addition of 0.65 million of Open Interest in the November month contract and Yes Bank witnessed an addition of 0.80 million units of Open Interest in the November month's future contract.