Nifty ends lower ahead of F&O expiry; settles below 10,500 mark

Key Indian Benchmark Nifty pared all its gains to settle lower on Wednesday, with the losses of 40.70 points. After a cautious start, the index managed to keep its head above water for most part of the day, taking support from rating agency ICRA’s expectations that gross value added (GVA) growth to rise by 50 basis points in 2018-19 to 7 percent, on the back of normal monsoon, a commitment towards fiscal consolidation at the Central and State level, and the commencement of broader efficiency gains related to Goods and Services Tax (GST). Some encouragement also came with the report that the Securities and Exchange Board of India’s (SEBI) board will consider proposals to ease compliance norms for insolvent firms - especially with regard to trading, listing and de-listing, and declaring results-at its meeting on Thursday. However, Nifty trimmed all its gains and entered into red terrain in the final hour of trade, as investors booked profits ahead of the December F&O expiry. Lower GST collection in the month of November also put some pressure on the market. The government’s revenue collection under the GST stood at Rs 80,808 crore in the month of November, down from more than Rs 83,000 crore in the previous month. Separately, amid the worries of GST rollout weighing down the manufacturing sector, the State Bank of India’s (SBI’s) Composite Index, an indicator of manufacturing activity that helps estimate periods of contraction and expansion, has showed that Indian manufacturing activity in December improved marginally over the previous month taken over a yearly period, while the index fell more sharply on a month-wise comparison.

Traders were seen piling up positions in Pharma, Media and IT stocks, while selling was witnessed in Realty, Metal and FMCG stocks. The top gainers from the F&O segment were Reliance Communications, Jaiprakash Associates and Sun Pharmaceutical Industries. On the other hand, the top losers were Housing Development and Infrastructure, Jubilant Foodworks and CEAT. In the index option segment, maximum OI continues to be seen in the 10400-11000 calls and 9800-10400 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 3.65% and reached 12.49. The 50-share Nifty was down by 40.75 points or 0.39% to settle at 10,490.75.

Nifty December 2017 futures closed at 10500.20 on Tuesday, at a premium of 9.45 points over spot closing of 10490.75, while Nifty January 2018 futures ended at 10533.35, at a premium of 42.60 points over spot closing. Nifty December futures saw a contraction of 4.54 million (mn) units, taking the total outstanding open interest (OI) to 13.48 mn units. The near month derivatives contract will expire on December 28, 2017.

From the most active contracts, Sun Pharmaceutical December 2017 futures traded at a premium of 3.80 points at 577.55 compared with spot closing of 573.75. The numbers of contracts traded were 59,575.

Reliance Communications December 2017 futures traded at a premium of 0.15 points at 28.75 compared with spot closing of 28.60. The numbers of contracts traded were 34,230.

Infosys December 2017 futures traded at a premium of 0.50 points at 1034.50 compared with spot closing of 1034.00. The numbers of contracts traded were 26,517.

Vedanta December 2017 futures traded at a premium of 1.70 points at 326.40 compared with spot closing of 324.70. The numbers of contracts traded were 23,022.
 
Reliance Industries December 2017 futures traded at a premium of 1.45 points at 924.70 compared with spot closing of 923.25. The numbers of contracts traded were 21,106.

Among Nifty calls, 10500 SP from the December month expiry was the most active call with a contraction of 0.98 million open interests. Among Nifty puts, 10500 SP from the December month expiry was the most active put with a contraction of 1.21 million open interests.  The maximum OI outstanding for Calls was at 10600 SP (5.45 mn) and that for Puts was at 10000 SP (6.44 mn). The respective Support and Resistance levels of Nifty are: Resistance 10539.02--- Pivot Point 10504.13--- Support --- 10455.87.

The Nifty Put Call Ratio (PCR) finally stood at 1.49 for December month contract. The top five scrips with highest PCR on OI were Godrej Consumer Products (3.35), DLF (1.97), Marico (1.82), IRB Infrastructure Developers (1.70) and Hindalco Industries (1.29).

Among most active underlying, Sun Pharmaceutical Industries witnessed a contraction of 13.74 million units of Open Interest in the December month futures contract, followed by Reliance Industries witnessing  a contraction of 9.39 million units of Open Interest in the December month contract, Maruti Suzuki India witnessed a contraction of 0.42 million units of Open Interest in the December month contract, State Bank of India witnessed a contraction of  16.70 million units of Open Interest in the December month contract and Reliance Communications witnessed  a contraction of 0.36 million units of Open Interest in the December month future contract.