Nifty tumbles ahead of F&O expiry; settles below 9400 mark

Indian equity benchmark Nifty gave up morning gains to end lower on Wednesday ahead of the F&O expiry of May series due tomorrow. While better-than-expected quarterly results from the likes of Tata Motors and Voltas supported sentiment in opening deals, geopolitical worries and news of a rating downgrade on China triggered profit booking in afternoon session. Concerns over tensions across the Line of Control where the Indian army conducted a few artillery raids yesterday, also weighed on the sentiments. Traders remained pessimistic with the private report stating that weak investment activity is likely to restrain economic growth at 6.6% for the quarter ended March 2017. Furthermore, Fitch Ratings’ report that GST reform may not boost revenues significantly in the next few years, but it can indirectly boost revenues in the medium term through higher GDP growth and more transparency, contributed to the downside.

Traders were seen piling up positions only in Auto and Private Banking stocks, while selling was witnessed in PSU, Pharma and Metal stocks.  The top gainers from the F&O segment were Voltas, Tata Motors and Tata Motors DVR.  On the other hand, the top losers were Max Financial Services, Tata Elxsi and GMR Infrastructure. In the index option segment, maximum OI continues to be seen in the 9300-9700 calls and 8800-9400 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 3.05% and reached 11.83. The 50-share Nifty was down by 25.60 points or 0.27% to settle at 9360.55.

Nifty May 2017 futures closed at 9364.85 on Wednesday at a premium of 4.30 points over spot closing of 9360.55, while Nifty June 2017 futures ended at 9373.15, at a premium of 12.60 points over spot closing. Nifty May futures saw a contraction of 3.64 million (mn) units, taking the total outstanding open interest (OI) to 11.66 million (mn) units. The near month derivatives contract will expire on May 25, 2017.

From the most active contracts, Tata Motors May 2017 futures traded at a discount of 2.35 points at 468.15 compared with spot closing of 470.50. The numbers of contracts traded were 39,024.

HDFC Bank May 2017 futures traded at a discount of 0.45 points at 1566.55 compared with spot closing of 1567.00. The numbers of contracts traded were 27,444.

Reliance Capital May 2017 futures traded at a premium of 3.65 points at 579.65 compared with spot closing of 576.00. The numbers of contracts traded were 22,129.

Lupin May 2017 futures traded at a discount of 4.45 points at 1230.70 compared with spot closing of 1235.15. The numbers of contracts traded were 22,017.

State Bank of India May 2017 futures traded at a premium of 0.25 points at 283.50 compared with spot closing of 283.25. The numbers of contracts traded were 21,928.

Among Nifty calls, 9400 SP from the May month expiry was the most active call with a contraction of 0.22 million open interests. Among Nifty puts, 9400 SP from the May month expiry was the most active put with a contraction of 1.11 million open interests. The maximum OI outstanding for Calls was at 9500 SP (6.67 mn) and that for Puts was at 9300 SP (4.89 mn). The respective Support and Resistance levels of Nifty are: Resistance 9414.42--- Pivot Point 9378.03--- Support --- 9324.17.

The Nifty Put Call Ratio (PCR) finally stood at 1.06 for May month contract. The top five scrips with highest PCR on OI were Infibeam Incorporation (1.78), TVS Motor (1.77), Kotak Bank (1.64), Bharti Airtel (1.44) and CEAT (1.30).

Among most active underlying, Tata Motors witnessed a contraction of 7.12 million units of Open Interest in the May month futures contract, followed by State Bank of India witnessing a contraction of 10.93 million units of Open Interest in the May  month contract, Reliance Capital witnessed a contraction of 3.16 million units of Open Interest in the May month contract, Tata Steel witnessed a contraction of 7.45 million units of Open Interest in the May  month future contract and Reliance Industries witnessed a contraction of 3.31 million units of Open Interest in the May month future contract.