Geopolitical turmoil pushes Nifty below 9200 mark

Mirroring weak cues from Asian and European markets, Indian equity benchmark -- Nifty -- ended the day in red on Friday for second consecutive session. The United States’ cruise missile attacks launched on a Syrian air base coupled with Thursday’s Reserve Bank of India’s monetary policy meet announcement kept the sentiments downbeat. The RBI kept key repo rate or lending rate unchanged at 6.25 per cent but hiked reverse repo rate by 25 basis points (bps) to 6 per cent. Besides, it projected retail inflation to increase to 5% in the second half of the current fiscal, citing risks of El Nino impacting the monsoon and one-off effects of the Goods and Services Tax. Profit booking at record highs also pushed the market to close in the negative zone. Some concerns also came with Fitch’s report that excessive government support to banks to deal with stressed assets and loose macroeconomic policy that could stoke inflation would be negative for the Indian economy. However, Fitch also outlined positive sensitivities for India which could come from fiscal initiatives that would cause the general government debt burden to fall more rapidly than expected in the medium term.

All the sectoral indices ended in red. The top gainers from the F&O segment Container Corporation of India, Max Financial Services and TVS Motor Company. On the other hand, the top losers were Jaiprakash Associates, Indian Bank and Jet Airways (India). In the index option segment, maximum OI continues to be seen in the 9000-9600 calls and 8500-9200 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 3.56% and reached 11.69. The 50-share Nifty was down by 63.65 points or 0.69% to settle at 9,198.30.

Nifty April 2017 futures closed at 9211.45 on Friday at a premium of 13.15 points over spot closing of 9198.30, while Nifty May 2017 futures ended at 9235.75, at a premium of 37.45 points over spot closing. Nifty April futures saw a contraction of 0.31 million (mn) units, taking the total outstanding open interest (OI) to 21.03 million (mn) units. The near month derivatives contract will expire on April 27, 2017.

From the most active contracts, Reliance Industries April 2017 futures traded at a premium of 6.30 points at 1411.55 compared with spot closing of 1,405.25. The numbers of contracts traded were 24,663.

Tata Steel April 2017 futures traded at a premium of 1.45 points at 493.60 compared with spot closing of 492.15. The numbers of contracts traded were 15,566.

Larsen & Toubro April 2017 futures traded at a premium of 6.20 points at 1689.00 compared with spot closing of 1,682.80. The numbers of contracts traded were 14,695.

Sun Pharmaceutical Industries April 2017 futures traded at a discount of 1 point at 666.00 compared with spot closing of 667.00. The numbers of contracts traded were 14,604.

State Bank of India April 2017 futures traded at a premium of 2 points at 290.30 compared with spot closing of 288.30. The numbers of contracts traded were 13,801.

Among Nifty calls, 9300 SP from the April month expiry was the most active call with an addition of 0.94 million open interests. Among Nifty puts, 9200 SP from the April month expiry was the most active put with a contraction of 0.04 million open interests. The maximum OI outstanding for Calls was at 9500 SP (4.97 mn) and that for Puts was at 9000 SP (5.39 mn). The respective Support and Resistance levels of Nifty are: Resistance 9236.50--- Pivot Point 9212.30--- Support --- 9174.10.

The Nifty Put Call Ratio (PCR) finally stood at 1.00 for April month contract. The top five scrips with highest PCR on OI were BOSCH (2.17), Tata Consultancy Services (1.65), WIPRO (1.29), Indraprastha Gas (1. 27) and United Breweries (1.08).

Among most active underlying, Reliance Industries witnessed a contraction of 1.18 million units of Open Interest in the April month futures contract, followed by Tata Steel witnessing a contraction of 0.33 million units of Open Interest in the April  month contract, State Bank of India witnessed an addition of 0.53 million units of Open Interest in the April month contract, Larsen & Toubro witnessed a contraction of 0.16 million units of Open Interest in the April  month future contract and Tata Motors witnessed an addition of 0.27 million units of Open Interest in the April  month future contract.