Nifty ends lower ahead of Fed decision

The local benchmark, Nifty ended a disappointing day with around half a percent cut, as cautiousness prevailed ahead of the US Federal Reserve’s two-day policy meeting that concludes later today. The Fed is expected to raise interest rates for the second time in a decade amid recent data suggesting the US recovery is gaining traction. Higher US interest rates would attract foreign investments from the emerging markets like India towards the US. Sentiments took a hit after Congress vice president Rahul Gandhi claimed that he had ‘personal information’ about corruption by Prime Minister Narendra Modi but that he wasn’t being allowed by ruling lawmakers to speak about it in Parliament. However, losses remained capped with positive economic data, while the retail inflation fell to a two-year low in November due to the ongoing cash crunch following the demonetization drive, the country’s current account deficit (CAD) narrowed by more than a percentage point to 0.6 percent of GDP at $ 3.4 billion in the July-September, on account of lower trade deficit. Further, WPI inflation continued its easing trend for the third straight month in November, falling to 3.15%.

Traders were seen piling up positions in IT and Realty stocks, while sharp selling was witnessed in Metal, PSU and Capital Goods sector stocks. The top gainers from the F&O segment were Axis Bank, HCL Technologies and MindTree. On the other hand, the top losers were Kaveri Seed Company, Coal India and UPL. In the index option segment, maximum OI continues to be seen in the 8200-8500 calls and 7800-8200 puts indicating this is the trading range expectation. In today's session, the 8200, 8300 and 8600 Call strikes saw addition of 3.82, 4.71 and 4.17 lakh shares, respectively. On the other hand, 8000, 7900 and 7800 Put strikes saw addition of 1.86, 0.92 and 2.88 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility increased by 4.20% and reached 16.59. The 50-share Nifty was down by 39.35 points or 0.48% to settle at 8,182.45.

Nifty December 2016 futures closed at 8197.65 on Wednesday at a premium of 15.20 points over spot closing of 8182.45, while Nifty January 2017 futures ended at 8231.60 at a premium of 49.15 points over spot closing. Nifty December futures saw a contraction of 0.38 million (mn) units, taking the total outstanding open interest (OI) to 16.58 million (mn) units. The near month derivatives contract will expire on December 29, 2016.

From the most active contracts, Axis Bank December 2016 futures traded at a discount of 0.10 points at 467.10 compared with spot closing of 467.20. The numbers of contracts traded were 20,707.

Reliance December 2016 futures traded at a premium of 0.50 points at 1060.00 compared with spot closing of 1059.50. The numbers of contracts traded were 14,878.

Tata Motors 2016 futures traded at a discount of 0.40 points at 471.95 compared with spot closing of 472.35. The numbers of contracts traded were 10,389.

Auro Pharma December 2016 futures traded at a premium of 1.95 points at 704.40 compared with spot closing of 702.45. The numbers of contracts traded were 9,080.

Infy December 2016 futures traded at a discount of 0.30 points at 999.45 compared with spot closing of 999.75. The numbers of contracts traded were 8,590.Among Nifty calls, 8300 SP from the December month expiry was the most active call with an addition of 0.23 million open interests. Among Nifty puts, 8100 SP from the December month expiry was the most active put with an addition of 0.29 million open interests. The maximum OI outstanding for Calls was at 8300 SP (5.38 mn) and that for Puts was at 8000 SP (8.03 mn). The respective Support and Resistance levels of Nifty are: Resistance 8219.53--- Pivot Point 8192.32--- Support --- 8155.23.             

The Nifty Put Call Ratio (PCR) finally stood at 1.21 for December month contract. The top five scrips with highest PCR on OI were Godrej Consumer Products (14), Colgate-Palmolive (India) (2.38), Marico (1.83), Apollo Hospitals Enterprise (1.45) and Hero MotoCorp (1.33).   

Among most active underlying, Axis Bank witnessed a contraction of 3.19 million of Open Interest in the December month futures contract, followed by Reliance Industries witnessing a contraction of 4.31 million of Open Interest in the December month contract, Vedanta witnessed a contraction of 1.99 million of Open Interest in the December month contract, Tata Motors witnessed an addition of 0.46 million of Open Interest in the December month contract and State Bank of India witnessed a contraction of 1.83 million units of Open Interest in the November month's future contract.