Nifty ends lower on Friday; IT stocks melt

Indian benchmark index --Nifty-- finished the session on Friday with a loss of over one third of a percent as IT stocks hit a rough patch on reports two US Congressmen have reintroduced a bill to curb the use of H-1B visas, on which the Indian IT sector is particularly dependent. The new bill would require workers on the H-1B visa pay a minimum of $100,000, up from $60,000 currently. Though, the index opened on a positive note tracking strong global cues but, it erased all the early gains and turned red in afternoon session. Sentiments remained subdued with President Pranab Mukherjee’s statement that the Narendra Modi government’s demonetisation decision could likely lead to a temporary slowdown in the economy and hurt the poor. However, the downside remained capped on report of Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley indicating that India appears to be much better placed with improved macro-economic fundamentals, as measures to eliminate shadow economy and tax evasion are expected to have positive impact on GDP. He said that India expects to grow at around 7 per cent in the first half of the next financial year.

Traders were seen piling up positions in Banking, PSU and Financial services stocks, while selling was witnessed in IT, Media and FMCG stocks. The top gainers from the F&O segment were JSW Energy, Wockhardt and Cadila Healthcare. On the other hand, the top losers were MindTree, Tech Mahindra and Just Dial. In the index option segment, maximum OI continues to be seen in the 8100-8600 calls and 7500-8300 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 0.91% and reached 14.91. The 50-share Nifty was down by 30 points or 0.36% to settle at 8,243.80.

Nifty January 2017 futures closed at 8267.65 on Friday at a premium of 23.85 points over spot closing of 8243.80, while Nifty February 2017 futures ended at 8293.75 at a premium of 49.95 points over spot closing. Nifty January futures saw a contraction of 0.04 million (mn) units, taking the total outstanding open interest (OI) to 18.72 million (mn) units. The near month derivatives contract will expire on January 25, 2017.

From the most active contracts, Yes Bank January 2017 futures traded at a discount of 1.60 points at 1247.90 compared with spot closing of 1,249.50. The numbers of contracts traded were 16,057.

Infosys January 2017 futures traded at a discount of 1.10 points at 976.20 compared with spot closing 977.30. The numbers of contracts traded were 14,771.

Wockhardt January 2017 futures traded at a premium of 3.75 points at 712.15 compared with spot closing of 708.40. The numbers of contracts traded were 14,263.

State Bank of India January 2017 futures traded at a premium of 0.85 points at 246.90 compared with spot closing of 246.05. The numbers of contracts traded were 14,138.

Vedanta January 2017 futures traded at a discount of 0.80 points at 230.40 compared with spot closing of 231.20. The numbers of contracts traded were 13,501.

Among Nifty calls, 8300 SP from the January month expiry was the most active call with an addition of 0.52  million open interests. Among Nifty puts, 8200 SP from the january month expiry was the most active put with an addition of 0.19 million open interests. The maximum OI outstanding for Calls was at 8400 SP (4.81 mn) and that for Puts was at 8000 SP (6.27 mn). The respective Support and Resistance levels of Nifty are: Resistance 8289.35--- Pivot Point 8261.30--- Support --- 8215.75.

The Nifty Put Call Ratio (PCR) finally stood at 1.21 for January month contract. The top five scrips with highest PCR on OI were Pidilite Industries (3.10), Dabur India (1.94), TVS Motor (1.84), Maruti Suzuki India (1.62)  and Ajanta Pharma (1.54).

Among most active underlying, Yes Bank witnessed an addition of 0.07 million of Open Interest in the January month futures contract, followed by State Bank of India witnessing a contraction of 2.44 million of Open Interest in the January month contract, Vedanta witnessed an addition of 0.07  million of Open Interest in the January month contract, Tata Steel witnessed a contraction of 0.13 million units of Open Interest in the January month future contract and Infosys witnessed an addition of 0.17 million units of Open Interest in the January month future contract.