Nifty skids lower after RBI keeps rates unchanged; manages to hold 8100 level

The fifty stock index -- Nifty -- erased all early gains to end lower on Wednesday, as investors turned jittery after the Reserve bank of India (RBI) unanimously decided to keep the policy rate unchanged at 6.25%, which was much against the street expectations. The RBI’s monetary policy committee voted 6-0 to leave the repo rate unchanged, saying it needed more time to assess if the recent cash squeeze would cause more lasting damage to the economy. Also, the slow pace of recovery in the economy too weighed on market sentiments. Acknowledging the threat to economic growth from notes ban, the central bank cut its GDP forecast, slashing gross value added growth outlook to 7.1% for FY17 from 7.6% earlier.

Market participants were seen piling up positions in Oil & Gas, Auto and Metal stocks, while sharp selling was witnessed in Realty, Banking and IT sector stocks. The top gainers from the F&O segment were Eicher Motors, BPCL and Bharat Forge. On the other hand, the top losers were Sun Pharma, HDIL and Bank of Baroda. 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 8100, 8200 and 8600 Call strikes saw addition of 1.21, 1.63 and 1.10 lakh shares, respectively. On the other hand, 7900 and 7500 Put strikes saw addition of 1.15 and 3.63 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 1.52% and reached 16.84. The 50-share Nifty was down by 41.10 points or 0.50% to settle at 8,102.05.

Nifty December 2016 futures closed at 8123.35 on Wednesday at a premium of 21.30 points over spot closing of 8102.05, while Nifty January 2017 futures ended at 8152.20 at a premium of 50.15 points over spot closing. Nifty December futures saw an addition of 0.33 million (mn) units, taking the total outstanding open interest (OI) to 15.83 million (mn) units. The near month derivatives contract will expire on December 29, 2016.

From the most active contracts, Sun Pharma December 2016 futures traded at a premium of 2.65 points at 666.65 compared with spot closing of 664.00. The numbers of contracts traded were 27,166.

SBI December 2016 futures traded at a premium of 0.45 points at 256.05 compared with spot closing of 255.60. The numbers of contracts traded were 22,099.

Yes Bank December 2016 futures traded at a premium of 3.15 points at 1191.40 compared with spot closing of 1188.25. The numbers of contracts traded were 15,002.

ICICI Bank December 2016 futures traded at a premium of 0.30 points at 259.00 compared with spot closing of 258.70. The numbers of contracts traded were 13,987.

Axis Bank December 2016 futures traded at a premium of 1.60 points at 448.70 compared with spot closing of 447.10. The numbers of contracts traded were 13,593.  

Among Nifty calls, 8300 SP from the December month expiry was the most active call with a contraction of 0.21 million open interests. Among Nifty puts, 8000 SP from the December month expiry was the most active put with an addition of 0.07 million open interests. The maximum OI outstanding for Calls was at 8300 SP (4.77 mn) and that for Puts was at 8000 SP (7.65 mn). The respective Support and Resistance levels of Nifty are: Resistance 8169.17 --- Pivot Point 8123.33 --- Support --- 8056.22.             

The Nifty Put Call Ratio (PCR) finally stood at 1.14 for December month contract. The top five scrips with highest PCR on OI were Hero MotoCorp (1.74), Eicher Motors (1.68), Ajanta Pharma (1.31), Ultratech Cement (1.13) and Bharti Airtel (1.05).   

Among most active underlying, State Bank of India witnessed an addition of 0.79 million of Open Interest in the December month futures contract, followed by Yes Bank witnessing an addition of 0.01 million of Open Interest in the December month contract, Sun Pharmaceuticals Industries witnessed an addition of 1.56 million of Open Interest in the December month contract, ICICI Bank witnessed a contraction of 2.17 million of Open Interest in the December month contract and Vedanta witnessed an addition of 2.00 million units of Open Interest in the November month's future contract.