Nifty slips after Fed hints at more rate hikes

The local benchmark, Nifty continued its southward journey for second consecutive day on Thursday and finished the choppy day of trade with cut of over three tens of a percent. Sentiments took a hit as the US Federal Reserve signalled a faster-than-expected pace of tightening next year, spurring fears of dollar outflows from emerging markets. Investors also reminded cautious with industry body CII’s report that India's economic growth will see a 'significant fall' in the second half of the current fiscal on account of cash crunch following demonetisation. As far as corporate earnings are concerned, the consumer goods sector has seen sales drop by 20 per cent in the last month. However, losses remained capped with Chief Economic Advisor Arvind Subramanian’s statement that the Indian economy is ‘well cushioned’ to absorb the impact of US Federal Reserve's rate hike. According to Subramanian, India is seen as better equipped than its other emerging market peers to weather the impact of higher U.S. interest rates because of its stronger economic growth and record high foreign exchange reserves of more than $300 billion.

Traders were seen piling up positions in IT, Banking and PSU stocks, while selling was witnessed in FMCG, Consumer Durables and Auto sector stocks. The top gainers from the F&O segment were Granules India, JSW Energy and IFCI. On the other hand, the top losers were Sun Pharmaceuticals Industries, Jindal Steel & Power and Tata Motors. 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.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 5.65% and reached 15.65. The 50-share Nifty was down by 28.85 points or 0.35% to settle at 8,153.60.

Nifty December 2016 futures closed at 8173.05 on Thursday at a premium of 19.45 points over spot closing of 8153.60, while Nifty January 2017 futures ended at 8207.95 at a premium of 54.35 points over spot closing. Nifty December futures saw a contraction of 1 million (mn) units, taking the total outstanding open interest (OI) to 15.58 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 0.05 points at 478.05 compared with spot closing of 478.10. The numbers of contracts traded were 25,065.

SBIN December 2016 futures traded at a premium of 0.50 points at 265.90 compared with spot closing of 265.40. The numbers of contracts traded were 16,179.

Sun Pharma 2016 futures traded at a premium of 2.20 points at 652.15 compared with spot closing of 649.95. The numbers of contracts traded were 15,212.

ICICI Bank December 2016 futures traded at a premium of 1.00 points at 261.30 compared with spot closing of 260.30. The numbers of contracts traded were 14,298.

Infy December 2016 futures traded at a premium of 2.25 points at 994.60 compared with spot closing of 992.35. The numbers of contracts traded were 11,174.

Among Nifty calls, 8300 SP from the December month expiry was the most active call with an addition of 0.51 million open interests. Among Nifty puts, 8100 SP from the December month expiry was the most active put with a contraction of 0.20 million open interests. The maximum OI outstanding for Calls was at 8300 SP (5.89 mn) and that for Puts was at 8000 SP (7.97 mn). The respective Support and Resistance levels of Nifty are: Resistance 8212.35--- Pivot Point 8167.15--- Support --- 8108.40.             

The Nifty Put Call Ratio (PCR) finally stood at 1.16 for December month contract. The top five scrips with highest PCR on OI were Godrej Consumer Products (14), DCB Bank (3), Colgate-Palmolive (2.38), UBL (1.45) and Apollo Hospitals Enterprise (1.36).   

Among most active underlying, Axis Bank witnessed a contraction of 0.82 million of Open Interest in the December month futures contract, followed by State Bank of India witnessing an addition of 0.83 million of Open Interest in the December month contract, Vedanta witnessed an addition of 0.86 million of Open Interest in the December month contract, Yes Bank witnessed an addition of 0.27 million of Open Interest in the December month contract and ICICI Bank witnessed an addition of 3.57 million units of Open Interest in the November month's future contract.