Nifty closes lower for second consecutive session

Despite positive global cues, Indian equity benchmark Nifty closed lower for second consecutive session on Wednesday on sustained selling by investors amid some disappointing quarterly results. Market participants remained cautious with a private report that WPI inflation is expected to rise in the next three months and is likely to average around 4.4 per cent in 2017, much higher than 2 per cent in 2016.  Sentiments also remained sluggish as domestic rating agency, Indian Ratings and Research retained its negative outlook on mid-sized and smaller state-run banks due to limited access to capital and large non-performing assets. However, the agency has maintained stable outlook on large public sector banks and private sector banks supported by high levels of capital. Furthermore, investors remained on the sidelines and refrained from any buying activity, ahead of the 10th meeting of the all-powerful GST Council this weekend.

On the sectoral front, Tata Motors and Sun Pharma shares were amongst the biggest decliners in the Nifty after their December quarter earnings came in below Street estimates. Traders were seen off-loading their positions in Realty, Auto and Pharma stocks, while buying was witnessed only in FMCG stocks. The top gainers from the F&O segment were Jindal Steel & Power, Indraprastha Gas and Adani Enterprises. On the other hand, the top losers were Tata Motors DVR, Tata Motors and Housing Development and Infrastructure. In the index option segment, maximum OI continues to be seen in the 8700-9200 calls and 8000-8800 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 2.97% and reached 14.21. The 50-share Nifty was down by 67.60 points or 0.77% to settle at 8,724.70.

Nifty February 2017 futures closed at 8743.10 on Wednesday at a premium of 18.40 points over spot closing of 8724.70, while Nifty March 2017 futures ended at 8777.15, at a premium of 52.45 points over spot closing. Nifty February futures saw an addition of 1.74 million (mn) units, taking the total outstanding open interest (OI) to 25.09 million (mn) units. The near month derivatives contract will expire on February 23, 2017.

From the most active contracts, Tata Motors February 2017 futures traded at a premium of 1.05 points at 437.75 compared with spot closing of 436.70. The numbers of contracts traded were 47,750.

Sun Pharmaceuticals Industries February 2017 futures traded at a premium of 2.05 points at 624.05 compared with spot closing of 622.00. The numbers of contracts traded were 21,546.

Infosys February 2017 futures traded at a discount of 0.75 points at 981.40 compared with spot closing of 982.15. The numbers of contracts traded were 17,348.

State Bank of India February 2017 futures traded at a premium of 0.25 points at 269.55 compared with spot closing of 269.30. The numbers of contracts traded were 15,292.

HDFC Bank February 2017 futures traded at a premium of 5.05 points at 1325.15 compared with spot closing of 1,320.10. The numbers of contracts traded were 13,731.

Among Nifty calls, 8800 SP from the February month expiry was the most active call with an addition of 0.77 million open interests. Among Nifty puts, 8700 SP from the February month expiry was the most active put with a contraction of 0.58 million open interests. The maximum OI outstanding for Calls was at 9000 SP (7.85 mn) and that for Puts was at 8500 SP (5.92 mn). The respective Support and Resistance levels of Nifty are: Resistance 8784.12--- Pivot Point 8748.48--- Support --- 8689.07.

The Nifty Put Call Ratio (PCR) finally stood at 1.09 for February month contract. The top five scrips with highest PCR on OI were Oracle Financial Services Software (2.00), Bharti Airtel (1.42), Tata Consultancy Services (1.37), Sun TV Network (1.36) and Eicher Motors (1.27).

Among most active underlying, Tata Motors witnessed an addition of 3.60 million units of Open Interest in the February month futures contract, followed by State Bank of India witnessing a contraction of 0.85  million units  of Open Interest in the February month contract, Tata Steel witnessed a contraction of 0.52 million units of Open Interest in the February month contract, Yes Bank witnessed a contraction of 0.33 million units of Open Interest in the February month future contract and Vedanta witnessed a contraction of 1.33 million units of Open Interest in the February month future contract.