Geopolitical worries drag Nifty below 10K mark

Indian equity benchmark -- Nifty -- settled the day below 10,000 mark on Friday, falling over a percent amid geopolitical tensions after renewed threat of North Korea conducting another hydrogen bomb test. The index remained under pressure from the opening to close the last day of trading week in red territory as anxiety spread among the markets participants after Organisation for Economic Co-operation and Development has trimmed India’s growth forecast for the current financial year, citing the temporary impact of the rollout of the goods and services tax and demonetisation, expecting the economy to expand at a slower pace than China. Some concerns also came with Finance Minister Arun Jaitley’s statement that stressed bank assets have become a concern for the economy. He further said that bad loans have crimped the ability of Indian lenders to offer new credit. Traders paid no heed towards the World Trade Organisation’s (WTO) report which has raised its 2017 forecast for world trade growth to 3.6 percent from the 2.4 percent estimated earlier, a development which augurs well for India.

All the sectoral indices ended in red on the NSE. The top gainers from the F&O segment were HCL Technologies, United Breweries and Wipro. On the other hand, the top losers were Hindalco Industries, Tata Steel and Yes Bank. In the index option segment, maximum OI continues to be seen in the 9900-10500 calls and 9500-10100 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 10.12% and reached 12.81. The 50-share Nifty was down by 157.50 points or 1.56% to settle at 9,964.40.

Nifty September 2017 futures closed at 9982.95 on Friday at a premium of 18.55 points over spot closing of 9964.40, while Nifty October 2017 futures ended at 10021.70 at a premium of 57.30 points over spot closing. Nifty September futures saw a contraction of 0.18 million (mn) units, taking the total outstanding open interest (OI) to 20.47 mn units. The near month derivatives contract will expire on September 28, 2017.

From the most active contracts, Sun Pharmaceutical Industries September 2017 futures traded at a premium of 1.00 point at 512.75 compared with spot closing of 511.75. The numbers of contracts traded were 21,418.

Divi's Laboratories September 2017 futures traded at a premium of 5.90 points at 972.60 compared with spot closing of 966.70. The numbers of contracts traded were 21,027.

Tata Motors September 2017 futures traded at a discount of 3.25 points at 411.75 compared with spot closing of 415.00. The numbers of contracts traded were 17,615.

Infosys September 2017 futures traded at a premium of 1.75 points at 900.75 compared with spot closing of 899.00. The numbers of contracts traded were 16,934.

Tata Steel September 2017 futures traded at a premium of 0.70 points at 655.10 compared with spot closing of 654.40. The numbers of contracts traded were 16,645.

Among Nifty calls, 10100 SP from the September month expiry was the most active call with an addition of 1.86 million open interests. Among Nifty puts, 10000 SP from the September month expiry was the most active put with a contraction of 1.29 million open interests. The maximum OI outstanding for Calls was at 10200 SP (6.44 mn) and that for Puts was at 9900 SP (4.21 mn). The respective Support and Resistance levels of Nifty are: Resistance 10055.37--- Pivot Point 10004.08--- Support --- 9913.12.

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for September month contract. The top five scrips with highest PCR on OI were the Ramco Cements (2.87), Indiabulls Real Estate (1.83), Oracle Financial Services Software (1.81), Dewan Housing Finance Corporation (1.28) and Tech Mahindra (1.25).

Among most active underlying, Tata Steel witnessed a contraction of 0.56 million units of Open Interest in the September month futures contract, followed by Reliance Industries witnessing a contraction of 2.34 million units of Open Interest in the September month contract, Reliance Capital witnessed an addition of 0.38 million units of Open Interest in the September month contract, State Bank of India witnessed a contraction of  3.54 million units of Open Interest in the September month contract and Divi's Laboratories witnessed a contraction of 1.59 million units of Open Interest in the September month future contract.