Nifty settles in red; dips below 9600 mark

Indian equity benchmark -- Nifty -- continued its southward journey for the fourth consecutive day on Friday and finished the choppy day with a cut of over half a percent as investors lightened their positions ahead of a long weekend. NSE will remain closed on Monday on account of Eid. Though, the index started the session on a positive note, it plunged immediately into red zone, tracking mixed cues from global markets amid falling crude oil prices. Sentiments remained downbeat with ICRA’s latest report that the current financial year 2017-18 (FY18) may continue to pose asset quality pain for the Indian banking sector, owing to restructuring by banks, weakness of some large corporate accounts along with the increasing demand for waiver of farm loans. Besides, the report stating that funding of crop loan waivers is likely to worsen the fiscal deficit and leverage levels of state governments with gross state development loans issued by the state governments expected to rise by Rs 70,000 crore in FY2018, also added the concerns. Investors shrugged off Urjit Patel’s statement that he is not 'overly pessimistic' about employment scenario in the IT sector, pointing out that mushrooming startups can compensate for job losses. He also highlighted that the soon-to-be implemented GST will not only create a national market but will also broaden the tax base which in turn will lower the overall taxes in the long-term.

Traders were seen piling up positions only in Pharma stocks, while selling was witnessed in PSU, Realty and Auto stocks. The top gainers from the F&O segment were Jaiprakash Associates, Indiabulls Real Estate and Reliance Communications. On the other hand, the top losers were Fortis Healthcare, Power Finance Corporation and Andhra Bank. In the index option segment, maximum OI continues to be seen in the 9500-10000 calls and 9000-9700 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 3.12% and reached 11.55. The 50-share Nifty was down by 55.05 points or 0.57% to settle at 9,574.95.

Nifty June 2017 futures closed at 9590.05 on Friday at a premium of 15.10 points over spot closing of 9574.95, while Nifty July 2017 futures ended at 9609.15, at a premium of 34.20 points over spot closing. Nifty June futures saw a contraction of 0.89 million (mn) units, taking the total outstanding open interest (OI) to 19.48 million (mn) units. The near month derivatives contract will expire on June 29, 2017.

From the most active contracts, ICICI Bank June 2017 futures traded at a premium of 1.20 points at 291.70 compared with spot closing of 290.50. The numbers of contracts traded were 21,983.

Reliance Capital June 2017 futures traded at a discount of 1.70 points at 651.30 compared with spot closing of 653.00. The numbers of contracts traded were 17,895.

State Bank of India June 2017 futures traded at a premium of 0.80 points at 289.75 compared with spot closing of 288.95. The numbers of contracts traded were 16,292.

DLF June 2017 futures traded at a premium of 1.15 points at 192.55 compared with spot closing of 191.40. The numbers of contracts traded were 16,222.

HDFC Bank June 2017 futures traded at a discount of 6.95 points at 1674.15 compared with spot closing of 1681.10. The numbers of contracts traded were 15,417.

Among Nifty calls, 9700 SP from the June month expiry was the most active call with an addition of 1.29 million open interests. Among Nifty puts, 9600 SP from the June month expiry was the most active put with a contraction of 0.51 million open interests. The maximum OI outstanding for Calls was at 9700 SP (8.24 mn) and that for Puts was at 9500 SP (5.81 mn). The respective Support and Resistance levels of Nifty are: Resistance 9626.63--- Pivot Point 9595.97--- Support --- 9544.28.

The Nifty Put Call Ratio (PCR) finally stood at 1 for June month contract. The top five scrips with highest PCR on OI were Amara Raja Batteries (2), Oriental Bank of Commerce (2), KPIT Technologies (1), Colgate-Palmolive (India) and Cipla (1).

Among most active underlying, ICICI Bank witnessed a contraction of 12.53 million units of Open Interest in the June month futures contract, followed by State Bank of India witnessing a contraction of 2.61 million units of Open Interest in the June  month contract, DLF witnessed a contraction of 3.77 million units of Open Interest in the June month contract, Reliance Capital witnessed a contraction of 0.42 million units of Open Interest in the June  month future contract and Tata Steel witnessed a contraction of 1.92 million units of Open Interest in the June month future contract.