Nifty prolongs downtrend for third consecutive session; tanks over 140 pts

The fifty stock index -- Nifty -- continued its southward journey for third consecutive day on Monday and finished the choppy day of trade with a cut of over one and half percent on account of lingering worries over the cash squeeze in the domestic economy and outflow of foreign institutional investment amid fears of a rate hike by the US Federal Reserve. A private report indicated that the government's move to withdraw higher-denomination banknotes is expected to pull down the gross domestic product growth from last year's 7.6 per cent by as much as 4.1 percentage points, while corporate operating profits are tipped to fall by as much as 40 per cent in the current quarter.  Further, foreign investors have pulled out close to $3 billion from the Indian capital market this month so far on lingering concerns over the government’s demonetisation decision and fears of a rate hike by the US Federal Reserve. According to data, net withdrawal by FPIs from equities stood at Rs. 9,841 crore during November 1-18, while the same from the debt market was Rs 9,720 crore during the period under review, translating into a total outflow of Rs 19,561 crore ($ 2.89 billion). The global sentiments remained mixed as Asian markets ended mostly higher, while European markets made a negative start, as investors were eyeing upcoming comments by European Central Bank President Mario Drgahi later in the day.

The top gainers from the F&O segment were Torrent Power, Bharti Infratel and Wipro. On the other hand, the top losers were Century Textiles & Industries, Bank of Baroda and Punjab National Bank. In the index option segment, maximum OI continues to be seen in the 8000-8600 calls and 7500-8000 puts indicating this is the trading range expectation. In today's session, the 7900, 8000 and 8100 Call strikes saw addition of 9.04, 16.14 and 12.28 lakh shares, respectively. On the other hand, 7900, 7800 and 7600 Put strikes saw addition of 0.93, 2.79 and 3.51 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 7.26% and reached 19.09. The 50-share Nifty was down by 145 points or 1.80% to settle at 7,929.10.

Nifty November 2016 futures closed at 7939.20 on Monday at a premium of 10.1 points over spot closing of 7929.10, while Nifty December 2016 futures ended at 7977.15 at a premium of 48.05 points over spot closing. Nifty November futures saw a contraction of 0.80 million (mn) units, taking the total outstanding open interest (OI) to 16.65 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 premium of 1.35 points at 261.35 compared with spot closing of 260.30. The numbers of contracts traded were 19,675.

State Bank of India November 2016 futures traded at a discount of 0.6 points at 257.90 compared with spot closing of 258.50. The numbers of contracts traded were 30,178.

Vedanta November 2016 futures traded at a premium of 0.25 points at 196.75 compared with spot closing of 197.50. The numbers of contracts traded were 14,039.

Hindalco Industries November 2016 futures traded at a premium of 1.15 points at 157.60 compared with spot closing of 156.45. The numbers of contracts traded were 15,018.

Axis Bank November 2016 futures traded at a discount of 0.50 points at 466.20 compared with spot closing of 466.70. The numbers of contracts traded were 14,691.   Among Nifty calls, 8100 SP from the November month expiry was the most active call with an addition of 1.28 million open interests. Among Nifty puts, 8000 SP from the November month expiry was the most active put with a contraction of 2.04 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.62 mn) and that for Puts was at 8000 SP (3.68 mn). The respective Support and Resistance levels of Nifty are: Resistance 8048.90--- Pivot Point 7982.65--- Support --- 7862.85.             

The Nifty Put Call Ratio (PCR) finally stood at 0.54 for November month contract. The top five scrips with highest PCR on OI were Cummins India (0.93), BPCL (0.90), UBL (0.88), JSW Steel (0.81) and Titan Company (0.80).   

Among most active underlying State Bank of India witnessed a contraction of 9.59 million of Open Interest in the November month futures contract, followed Vedanta witnessing a contraction of 6.23 million of Open Interest in the November month contract, ICICI Bank witnessed a contraction of 7.52 million of Open Interest in the November month contract, Yes Bank witnessed a contraction of 0.52 million of Open Interest in the November month contract and Punjab National Bank witnessed a contraction of 6.45 million units of Open Interest in the November month's future contract.