Nifty fails to hold 10k mark; ends marginally lower

Indian equity benchmark -- Nifty -- settled tad below its neutral line on Tuesday, after breaching the record 10,000 mark for the first time in opening trade. The index witnessed a gap-up opening as traders took encouragement with commerce and industry minister Nirmala Sitharaman’s statement that Foreign Direct Investment (FDI) inflows into the country increased 23 percent in the first two months of the current fiscal from a year ago. Investors also got some comfort with report that India ranked number two on Grant Thornton’s Business Optimism Index in the second quarter of 2017. The Grant Thornton International Business Report (IBR) said that the confidence in Indian businesses is backed by a buoyant economy and continued reforms. However, the market failed to hold the same throughout the session and ended slightly in red, as investors booked profit. Investors turned cautious ahead of two-day Federal Reserve meeting that will begin tonight and monitored corporate earnings.

Traders were seen piling up positions in Metal, PSU and   Realty stocks, while selling was witnessed in Media, FMCG and Pharma stocks.  The top gainers from the F&O segment were Mahindra & Mahindra Financial Services, Idea Cellular and Apollo Tyres. On the other hand, the top losers were Jaiprakash Associates, Zee Entertainment Enterprises and SREI Infrastructure Finance. In the index option segment, maximum OI continues to be seen in the 9700-10200 calls and 9400-10000 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 3.54% and reached 10.91. The 50-share Nifty was down by 1.85 points or 0.02% to settle at 9,964.55.

Nifty July 2017 futures closed at 9973.80 on Tuesday at a premium of 9.25 points over spot closing of 9964.55, while Nifty August 2017 futures ended at 10013.80 at a premium of 49.25 points over spot closing. Nifty July futures saw a contraction of 2.15 million (mn) units, taking the total outstanding open interest (OI) to 14.54 million (mn) units. The near month derivatives contract will expire on July 27, 2017.

From the most active contracts, Axis Bank July 2017 futures traded at a discount of 2.45 points at 544.95 compared with spot closing of 547.40. The numbers of contracts traded were 25,909.

Tata Consultancy Services July 2017 futures traded at a discount of 0.95 points at 2578.05 compared with spot closing of 2579.00. The numbers of contracts traded were 21,332.

Vedanta July 2017 futures traded at a discount of 1.45 points at 274.30 compared with spot closing of 275.75. The numbers of contracts traded were 20,265.

Reliance Industries July 2017 futures traded at a premium of 2.35 points at 1604.85 compared with spot closing of 1602.50. The numbers of contracts traded were 19,476.

Infosys July 2017 futures traded at a premium of 1.30 points at 995.30 compared with spot closing of 994.00. The numbers of contracts traded were 18,539.

Among Nifty calls, 10000 SP from the July month expiry was the most active call with an addition of 0.88 million open interests. Among Nifty puts, 9900 SP from the July month expiry was the most active put with an addition of 0.38 million open interests. The maximum OI outstanding for Calls was at 10000 SP (7.38 mn) and that for Puts was at 9900 SP (6.36 mn). The respective Support and Resistance levels of Nifty are: Resistance 10000.87--- Pivot Point 9974.98--- Support --- 9938.67.

The Nifty Put Call Ratio (PCR) finally stood at 1.65 for July month contract. The top five scrips with highest PCR on OI were Bharti Airtel (1.75), Tata Consultancy Services (1.45), Hindalco Industries (1.39), Wipro (1.36) and Indiabulls Real Estate (1.25).

Among most active underlying, Reliance Industries witnessed a contraction of 2.72 million units of Open Interest in the July month futures contract, followed by Axis Bank witnessing a contraction of 4.28 million units of Open Interest in the July month contract, Vedanta witnessed a contraction of 4.80 million units of Open Interest in the July month contract, HDFC Bank witnessed a contraction of 3.10 million units of Open Interest in the July month future contract and Tata Consultancy Services witnessed a contraction of 1.69 million units of Open Interest in the July month future contract.