Nifty extends losses for second consecutive day

Indian equity benchmark -- Nifty -- extended its losses for the second straight day on Wednesday as investors adopted a wait-and-watch approach ahead of the state elections results due on Saturday and a U.S. Federal Reserve policy meeting next week. Sentiments also remained subdued with a private report stating that Consumer price inflation is likely to rise in February for the first time since demonetisation and this could prompt the Reserve Bank of India (RBI) to hike rates much sooner than most expect. However, losses remained capped with Prime Minister Narendra Modi's statement that his government has been able to tame inflation, which had gone out of control before 2014, and no political party could raise the issue during the polls in five states. PM cited examples of how different organisations around the world including the World Bank, IMF and others have appreciated the demonetisation move.

Traders were seen piling up positions in Media, Banking and Pharma stocks, while selling was witnessed in Metal, Realty and IT stocks. The top gainers from the F&O segment Bharat Financial Inclusion, Bajaj Finance and Bosch.  On the other hand, the top losers were Reliance Communications, Adani Power and NMDC. In the index option segment, maximum OI continues to be seen in the 8900-9500 calls and 8400-9000 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 1.44% and reached 14.07. The 50-share Nifty was down by 22.60 points or 0.25% to settle at 8924.30.

Nifty March 2017 futures closed at 8952.10 on Wednesday at a premium of 27.80 points over spot closing of 8924.30, while Nifty April 2017 futures ended at 8977.30, at a premium of 53 points over spot closing. Nifty March futures saw an addition of 0.31 million (mn) units, taking the total outstanding open interest (OI) to 22.16 million (mn) units. The near month derivatives contract will expire on March 30, 2017.

From the most active contracts, Bharat Financial Inclusion March 2017 futures traded at a premium of 3.75 points at 856.75 compared with spot closing of 853.00. The numbers of contracts traded were 38,773.

Jet Airways (India) March 2017 futures traded at a premium of 4.60 points at 451.50 compared with spot closing of 446.90. The numbers of contracts traded were 34,186.

Reliance Industries March 2017 futures traded at a premium of 9.75 points at 1297.90 compared with spot closing of 1288.15. The numbers of contracts traded were 18,977.

GAIL (India) March 2017 futures traded at a discount of 12.95 points at 507.05 compared with spot closing of 520.00. The numbers of contracts traded were 16,228.

Vedanta March 2017 futures traded at a premium of 2.15 points at 253.45 compared with spot closing of 251.30. The numbers of contracts traded were 15,330.

Among Nifty calls, 9000 SP from the March month expiry was the most active call with a contraction of 0.25 million open interests. Among Nifty puts, 8900 SP from the March  month expiry was the most active put with an addition of 0.38 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.18 mn) and that for Puts was at 8800 SP (4.16 mn). The respective Support and Resistance levels of Nifty are: Resistance 8956.92--- Pivot Point 8924.43--- Support --- 8891.82.

The Nifty Put Call Ratio (PCR) finally stood at 0.91 for March month contract. The top five scrips with highest PCR on OI were Indo Count Industries (1.76), Tata Consultancy Services (1.39), NIIT Technologies (1.32), YES Bank (0.94) and Indraprastha Gas (0.88).

Among most active underlying, Bharat Financial Inclusion witnessed an addition of 0.91 million units of Open Interest in the March month futures contract, followed by Reliance Industries witnessing an addition of 0.30 million units  of Open Interest in the March  month contract, Jet Airways (India) witnessed an addition of 1.08 million units of Open Interest in the March month contract, Vedanta  witnessed an addition of 4.04 million units of Open Interest in the March  month future contract and Tata Steel witnessed an addition of 0.60 million units of Open Interest in the March  month future contract.