Nifty closes lower on F&O expiry day

The local benchmark--Nifty--ended the day in red terrain on Thursday, as investors adopted a cautious approach in view of December derivatives expiry. The index managed to trade above its neutral line for the most part of the session with marginal gains, amid reports that the capital markets regulator, Securities and Exchange Board of India (SEBI) is likely to ease entry norms for FPIs willing to invest in the Indian markets. Some support also came with EEPC India new chairman, Ravi P Sehgal’s statement that the year 2018 is expected to be a good year for exports, as it promises to be full of opportunities and growth for the Indian exporters, on the back of improving global trade. Separately, credit rating agency, ICRA in its latest report stated that the retail credit growth for non-banking financial companies is likely to be moderate at 16-18 percent in the current fiscal, helped by some asset classes, such as SME credit. However, in the last hour of trade, Nifty slipped into red, amid fears that the government going for additional borrowing could upset fiscal deficit calculations. The government has decided to raise additional market borrowing of Rs 50,000 crore through dated government securities in the last three months of FY18.

Traders were seen piling up positions in Metal, Realty and Private Banking stocks, while selling was witnessed in Media, Pharma and FMCG stocks. The top gainers from the F&O segment were Reliance Capital, Reliance Communications and Jaiprakash Associates. On the other hand, the top losers were Can Fin Homes, Balrampur Chini Mills and Kaveri Seed Company. In the index option segment, maximum OI continues to be seen in the 10400-11000 calls and 10000-10500 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 1.56 % and reached 12.29. The 50-share Nifty was down by 12.85 points or 0.12% to settle at 10,477.90.

Nifty January 2018 futures closed at 10517.90 on Thursday, at a premium of 40 points over spot closing of 10477.90, while Nifty February 2018 futures ended at 10542.35, at a premium of 64.45 points over spot closing. Nifty January futures saw an addition of 8.92 million (mn) units, taking the total outstanding open interest (OI) to 22.22 mn units. The near month derivatives contract will expire on January 25, 2018.

From the most active contracts, Reliance Industries January 2018 futures traded at a premium of 6.4 points at 929.00 compared with spot closing of 922.60. The numbers of contracts traded were 30,854.

Tata Motors January 2018 futures traded at a premium of 2.95 points at 420.45 compared with spot closing of 417.50. The numbers of contracts traded were 25,764.

Infosys January 2018 futures traded at a premium of 8.80 points at 1038.80 compared with spot closing of 1,030.00. The numbers of contracts traded were 20,537.

Among Nifty calls, 10500 SP from the January month expiry was the most active call with an addition of 0.53 million open interests. Among Nifty puts, 10500 SP from the January month expiry was the most active put with an addition of 0.61 million open interests.  The maximum OI outstanding for Calls was at 11000 SP (3.37 mn) and that for Puts was at 10000 SP (3.77 mn). The respective Support and Resistance levels of Nifty are: Resistance 10521.48 --- Pivot Point 10490.97 --- Support --- 10447.38.

The Nifty Put Call Ratio (PCR) finally stood at 1.07 for January month contract. The top five scrips with highest PCR on OI were Repco Home Finance (4.50), Godfrey Phillips India (3.00), Torrent Power (1.91), the Ramco Cements (1.75) and Multi Commodity Exchange of India (1.57).

Among most active underlying, Reliance Industries witnessed an addition of 19.70 million units of Open Interest in the January month futures contract, followed by Maruti Suzuki India witnessing  an addition of 0.85 million units of Open Interest in the January month contract, State Bank of India witnessed an addition of 26.42 million units of Open Interest in the January month contract, Tata Steel witnessed an addition of  6.08 million units of Open Interest in the January month contract and Reliance Infrastructure witnessed  an addition of 4.10 million units of Open Interest in the January month future contract.