Nifty ends on pessimistic note; manages to hold 9400 mark

Indian equity benchmark -- Nifty -- ended the last trading day of the week on a negative note as investors looked ahead to the new series of industrial output and inflation data due post-market hours for further direction. Consumer price inflation (CPI) is expected to have eased to a three-month low of 3.49% in April from 3.81% the previous month, below the central bank’s medium-term target of 4% due to lower base effects and a fall in the cost of pulses, cereals and perishable goods. Heightened political uncertainty in Washington triggered by President Donald Trump's abrupt firing of FBI chief James Comey and the improving odds of a June rate hike also kept underlying sentiments cautious. Some concerns also came with Fitch Ratings’ latest report that Indian authorities are making a more concerted push to clean up bad loans in the banking sector but the move would impinge on banks' profitability in the short-term and it is possible that further losses will push some weaker banks closer to breaching minimum capital requirements, unless they receive pre-emptive capital injections. However, downside remained capped with Finance Secretary Ashok Lavasa’s statement that India can clock a GDP growth of over 7.5 percent in the fiscal 2017-18 and the country's macro-economic fundamentals, including fiscal deficit and inflation, are all very sound.

Traders were seen piling up positions in Realty, IT and Auto stocks, while selling was witnessed in Banking, Media and Financial Services stocks. The top gainers from the F&O segment were Indiabulls Real Estate, NIIT Technologies and Piramal Enterprises.  On the other hand, the top losers were Glenmark Pharmaceuticals, Oriental Bank of Commerce and Yes Bank.  In the index option segment, maximum OI continues to be seen in the 9200-9700 calls and 8800-9500 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 1.94% and reached 10.62. The 50-share Nifty was down by 21.50 points or 0.23% to settle at 9,400.90.

Nifty May 2017 futures closed at 9414.80 on Friday at a premium of 13.90 points over spot closing of 9,400.90, while Nifty June 2017 futures ended at 9415.35, at a premium of 14.45 points over spot closing. Nifty May futures saw a contraction of 0.52 million (mn) units, taking the total outstanding open interest (OI) to 20.61 million (mn) units. The near month derivatives contract will expire on May 25, 2017.

From the most active contracts, Yes Bank May 2017 futures traded at a discount of 2.80 points at 1488.20 compared with spot closing of 1491.00. The numbers of contracts traded were 74,420.

Glenmark Pharmaceuticals May 2017 futures traded at a premium of 5.45 points at 762.40 compared with spot closing of 756.95. The numbers of contracts traded were 23,541 .

Axis Bank May 2017 futures traded at a premium of 0.65 points at 504.55 compared with spot closing of 503.90. The numbers of contracts traded were 21,084.

DLF May 2017 futures traded at a discount of 0.50 points at 208.40 compared with spot closing of 208.90. The numbers of contracts traded were 19,694.

Dr. Reddy's Laboratories May 2017 futures traded at a premium of 17.60 points at 2592.60 compared with spot closing of 2575.00. The numbers of contracts traded were 17,605.

Among Nifty calls, 9500 SP from the May month expiry was the most active call with an addition of 0.39 million open interests. Among Nifty puts, 9300 SP from the May month expiry was the most active put with a contraction of 0.35 million open interests. The maximum OI outstanding for Calls was at 9500 SP (7.08 mn) and that for Puts was at 9300 SP (7.26 mn). The respective Support and Resistance levels of Nifty are: Resistance 9434.92--- Pivot Point 9403.73--- Support --- 9369.72.

The Nifty Put Call Ratio (PCR) finally stood at 1.21 for May month contract. The top five scrips with highest PCR on OI were Infibeam Incorporation (2.36), Eicher Motors (2.23), Hero MotoCorp (1.95), Bharti Airtel (1.62) and CEAT (1.46).

Among most active underlying, Yes Bank witnessed an addition of 1.75 million units of Open Interest in the May month futures contract, followed by DLF witnessing an addition of 0.24 million units of Open Interest in the May  month contract, ICICI Bank witnessed a contraction of 2.23 million units of Open Interest in the May month contract, Axis Bank witnessed an addition of 2.31 million units of Open Interest in the May  month future contract and State Bank of India witnessed a contraction of 1.94 million units of Open Interest in the May month future contract.