Nifty ends lower; fails to gather optimism from RBI Policy Review

Indian equity benchmark -- Nifty -- failed to gather optimism even after the Reserve Bank of India (RBI) slashed repo rate and ended the session on a negative note on Wednesday. RBI has reduced repo rate by 25 basis points (bps) from 6.25% to 6% in its latest credit and monetary policy review, reducing the key policy rates for the first time in this fiscal year. The revised repo rate at 6% is the lowest in six-and-a-half years since November 2010.The reverse repo rate has also been reduced by 25 bps to 5.75%. Though, the index started the day on a positive note, it immediately slipped in red and traded lower throughout the session. Sentiments remained cautious as finance minister Arun Jaitley cautioned that the fiscal deficit of states may rise this year, with states likely to tap the markets to raise funds to finance farm debt waivers. Investors paid no heed towards Minister of State for Finance Santosh Kumar Gangwar’s statement that the government has collected over Rs 1.80 lakh crore in direct tax till July 15 in the current fiscal, an increase of 21.4 per cent year-on-year, belying fears of slowdown in economic activities. The current growth rate is higher than the target rate of 15.32 percent required to achieve the Budget Estimate.

All the sectoral indices ended in red on the NSE. The top gainers from the F&O segment were Balrampur Chini Mills, NTPC and Apollo Tyres. On the other hand, the top losers were Jaiprakash Associates, Godrej Consumer Products and Infibeam Incorporation. In the index option segment, maximum OI continues to be seen in the 9900-10500 calls and 9400-10100 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 0.29% and reached 11.94. The 50-share Nifty was down by 33.15 points or 0.33% to settle at 10081.50.

Nifty August 2017 futures closed at 10101.10 on Wednesday at a premium of 19.60 points over spot closing of 10081.50, while Nifty September 2017 futures ended at 10137.30 at a premium of 55.80 points over spot closing. Nifty August futures saw an addition of 0.85 million (mn) units, taking the total outstanding open interest (OI) to 21.06 million (mn) units. The near month derivatives contract will expire on August 31, 2017.

From the most active contracts, Lupin August 2017 futures traded at a premium of 5.00 points at 1038.05 compared with spot closing of 1033.05. The numbers of contracts traded were 30,864.

Punjab National Bank August 2017 futures traded at a premium of 2.00 points at 159.85 compared with spot closing of 157.85. The numbers of contracts traded were 28,072.

Reliance Industries August 2017 futures traded at a premium of 7.50 points at 1632.60 compared with spot closing of 1625.10. The numbers of contracts traded were 18,004.

State Bank of India August 2017 futures traded at a premium of 4.05 points at 309.65 compared with spot closing of 305.60. The numbers of contracts traded were 16,110.

Reliance Capital August 2017 futures traded at a premium of 8.05 points at 734.55 compared with spot closing of 726.50. The numbers of contracts traded were 13,818.

Among Nifty calls, 10200 SP from the August month expiry was the most active call with an addition of 0.86 million open interests. Among Nifty puts, 10000 SP from the August month expiry was the most active put with a contraction of 0.12 million open interests. The maximum OI outstanding for Calls was at 10500 SP (3.64 mn) and that for Puts was at 10000 SP (4.83 mn). The respective Support and Resistance levels of Nifty are: Resistance 10128.17--- Pivot Point 10091.18--- Support --- 10044.52.

The Nifty Put Call Ratio (PCR) finally stood at 1.12 for August month contract. The top five scrips with highest PCR on OI were Oil India (2.77), Nestle India (2.33), Kajaria Ceramics (1.67), Infibeam Incorporation (1.54) and Eicher Motors (1.39).

Among most active underlying, Reliance Industries witnessed a contraction of 0.09 million units of Open Interest in the August month futures contract, followed by State Bank of India witnessing an addition of 1.43 million units of Open Interest in the August month contract, Punjab National Bank witnessed an addition of 0.21 million units of Open Interest in the August month contract, Lupin witnessed a contraction of 0.47 million units of Open Interest in the August month future contract and Reliance Capital witnessed a contraction of 0.003 million units of Open Interest in the August month future contract.