Nifty closes below 9,500 mark on penultimate session of F&O expiry

Continuing its losing streak for the sixth straight session, Indian equity benchmark -- Nifty -- closed in red on Wednesday, as worries about provisioning towards large NPA accounts and anxiety ahead of GST roll-out continued to keep investors on the sidelines. The street was in line with the global sentiments, as Asian shares slumped after Wall Street was knocked hard in the wake of a delay to a US healthcare reform vote. Sentiments remained downbeat with Finance Minister Arun Jaitley’s statement that people may have to face some difficulty initially during the Goods and Services Tax (GST) is rolled out, but in the long run the new indirect tax regime would help cut tax evasion and check price rise. Investors also hit the sell button ahead of the expiry of June derivatives. The June contracts are set to expire tomorrow. Some anxiety also came with the report that the credit rating agency Fitch maintained its negative outlook on Indian banks because of erosion of the sector's core capitalisation, even as they enter the final phase of Basel III migration. This is based on its assessment that the sector’s core capitalization, which has been eroded in the last few years, will remain challenged unless it is boosted by adequate capital support from the authorities or equity raising from capital markets.

Traders were seen piling up positions in Metal, Realty and IT stocks, while selling was witnessed in PSU, FMCG and Media stocks. The top gainers from the F&O segment were Adani Power, InterGlobe Aviation and United Spirits. On the other hand, the top losers were Jaiprakash Associates, Reliance Communications and Pidilite Industries. 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 decreased by 4.14% and reached 11.99. The 50-share Nifty was down by 20.15 points or 0.21% to settle at 9491.25.

Nifty June 2017 futures closed at 9495.60 on Wednesday at a premium of 4.35 points over spot closing of 9491.25, while Nifty July 2017 futures ended at 9508.75, at a premium of 17.50 points over spot closing. Nifty June futures saw a contraction of 2.82 million (mn) units, taking the total outstanding open interest (OI) to 10.44 million (mn) units. The near month derivatives contract will expire on June 29, 2017.

From the most active contracts, HDFC Bank June 2017 futures traded at a discount of 8.45 points at 1658.05 compared with spot closing of 1666.50. The numbers of contracts traded were 31,653.

Infosys June 2017 futures traded at a premium of 1.85 points at 925.85 compared with spot closing of 924.00. The numbers of contracts traded were 23,691.

State Bank of India June 2017 futures traded at a premium of 1.00 point at 277.25 compared with spot closing of 276.25. The numbers of contracts traded were 20,680.

ICICI Bank June 2017 futures traded at a premium of 1.15 points at 291.10 compared with spot closing of 289.95. The numbers of contracts traded were 20,554.

Axis Bank June 2017 futures traded at a discount of 1.75 points at 494.70 compared with spot closing of 496.45. The numbers of contracts traded were 19,983.

Among Nifty calls, 9500 SP from the June month expiry was the most active call with an addition of 0.47 million open interests. Among Nifty puts, 9500 SP from the June month expiry was the most active put with a contraction of 0.94 million open interests. The maximum OI outstanding for Calls was at 9700 SP (7.84 mn) and that for Puts was at 9500 SP (4.19 mn). The respective Support and Resistance levels of Nifty are: Resistance 9517.72--- Pivot Point 9496.03--- Support --- 9469.57.

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 (3), KPIT Technologies (1), Oriental Bank of Commerce (1), Cipla (1) and Colgate-Palmolive (India) (1).

Among most active underlying, State Bank of India witnessed a contraction of 9.43 million units of Open Interest in the June month futures contract, followed by HDFC Bank witnessing a contraction of 7.31 million units of Open Interest in the June  month contract, Maruti Suzuki India witnessed a contraction of 0.54 million units of Open Interest in the June month contract, Reliance Industries witnessed a contraction of 2.62 million units of Open Interest in the June  month future contract and Tata Steel witnessed a contraction of 7.85 million units of Open Interest in the June month future contract.