Nifty ends first session of 2017 on pessimistic note

The local equity benchmark Nifty ended the first trading day of calendar year 2017 in red, as banking stocks felt the heat due to worries that the lending rate cuts will hit their bottom line. The sentiments remained pessimistic after industry body, Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its latest report highlighted that banning of high value notes would lower growth rate due to economic slowdown in the third and fourth quarters of fiscal 2016-17. Some pessimism also came after India’s manufacturing PMI (purchase manager’s index) fell in December 2016 as demonetization took its toll on the economy. The Nikkei India Manufacturing PMI, dropped to 49.6 in December from November's 52.3, showing the first business activity contraction in 12 months.

Traders were seen piling up positions in Realty, Auto and Metal stocks, while selling was witnessed in PSU Bank, FMCG and IT sector stocks. The top gainers from the F&O segment were Indiabulls Real Estate, DLF and The India Cements. On the other hand, the top losers were LIC Housing Finance, Housing Development Finance Corporation and Bank of Baroda. In the index option segment, maximum OI continues to be seen in the 8000-8500 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 increased by 2.36% and reached 15.83. The 50-share Nifty was down by 6 points or 0.08% to settle at 8,179.50.

Nifty January 2017 futures closed at 8192.10 on Monday at a premium of 12.60 points over spot closing of 8,179.50, while Nifty February 2017 futures ended at 8216.45 at a premium of 36.95 points over spot closing. Nifty January futures saw a contraction of 0.07 million (mn) units, taking the total outstanding open interest (OI) to 17.03 million (mn) units. The near month derivatives contract will expire on January 25, 2017.

From the most active contracts, State Bank of India January 2017 futures traded at a premium of 1.20 points at 244.75 compared with spot closing of 243.55. The numbers of contracts traded were 20,367.

Maruti Suzuki India January 2017 futures traded at a premium of 8.95 points at 5478.95 compared with spot closing of 5,470.00. The numbers of contracts traded were 13,948.

Tata Steel January 2017 futures traded at a premium of 0.90 points at 407.10 compared with spot closing of 406.20. The numbers of contracts traded were 11,863.

LIC Housing Finance January 2017 futures traded at a premium of 3.00 points at 532.55 compared with spot closing of 529.55. The numbers of contracts traded were 11,285.

ICICI Bank January 2017 futures traded at a premium of 0.65 points at 252.90 compared with spot closing of 252.25. The numbers of contracts traded were 10,242.

Among Nifty calls, 8200 SP from the January month expiry was the most active call with a contraction of 0.33  million open interests. Among Nifty puts, 8100 SP from the january month expiry was the most active put with an addition of 0.29 million open interests. The maximum OI outstanding for Calls was at 8200 SP (3.94 mn) and that for Puts was at 8000 SP (5.79 mn). The respective Support and Resistance levels of Nifty are: Resistance 8216.40--- Pivot Point 8175.10--- Support --- 8138.20.

The Nifty Put Call Ratio (PCR) finally stood at 1.19 for January month contract. The top five scrips with highest PCR on OI were Ajanta Pharma (1.82), TVS Motor (1.80), Maruti Suzuki India (1.45), DLF(1.39) and Amara Raja Batteries (1.36).

Among most active underlying, State Bank of India witnessed an addition of 11.12 million of Open Interest in the January month futures contract, followed by Maruti Suzuki India witnessing an addition of 0.21 million of Open Interest in the January month contract, Tata Steel witnessed an addition of 0.89  million of Open Interest in the January month contract, Tata Motors witnessed an addition of 0.45  million units of Open Interest in the January month future contract and Vedanta witnessed an addition of 0.81  million units of Open Interest in the January month future contract.