Nifty ends in red for second consecutive session

The local equity benchmarks ended in red on Wednesday for the second consecutive session, on the back of mixed global cues. The index remained subdued throughout the day, amid cautiousness ahead of upcoming union budget, scheduled to be released on February 1, 2018. Investors’ sentiments remained downbeat with Chief Economic Adviser Arvind Subramanian’s statement that elevated stock prices are a matter of concern and could correct sharply if they are not backed by growth, requiring ‘heightened vigilance’. However, the Nifty managed to trim some of its losses in the last leg of trade, as traders took support with global credit rating agency, Moody’s Investors Service’s Vice-President (Sovereign Risk Group) William Foster statement that recently introduced new tax regime is still a work in progress and expected to stabilise in the next few quarters. Foster noted that this move will help in formalisation of Indian economy. Some relief also came with the reports that India has been ranked sixth in the list of wealthiest countries with total wealth of $8,230 billion, while the United States topped the chart. Adding some support, Domestic credit rating agency, ICRA in its latest report has said that banks are likely to increase deposit rates in the near term as incremental credit has outpaced deposits in the last quarter, which has pushed up the credit/deposit ratio (the proportion of deposits used for lending) of the banking system. Besides, it noted that the government’s Rs 88,139 crore capital infusion in struggling public sector banks (PSBs), will improve their ability to pursue credit growth in the coming months.

Traders were seen piling up positions in Banking, Financial Services and Private Banking stocks, while selling was witnessed in IT, Metal and Media stocks.  The top gainers from the F&O segment were Kaveri Seed Company, TV18 Broadcast and Engineers India. On the other hand, the top losers were Fortis Healthcare, Kajaria Ceramics and Reliance Naval and Engineering. In the index option segment, maximum OI continues to be seen in the 11000-12000 calls and 10500-11000 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 2.95% and reached 15.93. The 50-share Nifty was down by 21.95 points or 0.20% to settle at 11,027.70.

Nifty February 2018 futures closed at 11055.40 on Wednesday, at a premium of 27.70 points over spot closing of 11,027.70, while Nifty March 2018 futures ended at 11076.20, at a premium of 48.50 points over spot closing. Nifty February futures saw a contraction of 1.11 million (mn) units, taking the total outstanding open interest (OI) to 24.66 mn units. The near month derivatives contract will expire on February 22, 2018.

From the most active contracts, Tata Steel February 2018 futures traded at a premium of 2.55 points at 709.15 compared with spot closing of 706.60. The numbers of contracts traded were 27,330.

ICICI Bank February 2018 futures traded at a premium of 1.20 points at 354.35 compared with spot closing of 353.15. The numbers of contracts traded were 18,650.

PC Jeweller 2018 futures traded at a premium of 1.65 points at 488.55 compared with spot closing of 486.90. The numbers of contracts traded were 15,617.

Vedanta February 2018 futures traded at a premium of 0.45 points at 341.35 compared with spot closing of 340.90. The numbers of contracts traded were 15,033.

State Bank of India Industries February 2018 futures traded at a discount of 0.40 point at 314.10 compared with spot closing of 314.50. The numbers of contracts traded were 13,784.

Among Nifty calls, 11500 SP from the February month expiry was the most active call with an addition of 1.14 million open interests. Among Nifty puts, 11000 SP from the February month expiry was the most active put with an addition of 0.25 million open interests.  The maximum OI outstanding for Calls was at 11500 SP (4.10 mn) and that for Puts was at 10500 SP (5.82 mn). The respective Support and Resistance levels of Nifty are: Resistance 11064.37--- Pivot Point 11021.83--- Support --- 10985.17.

The Nifty Put Call Ratio (PCR) finally stood at 1.02 for February month contract. The top five scrips with highest PCR on OI were Berger Paints (3.61), V-Guard Industries (1.83), ICICI Bank (1.58), Bosch (1.50) and Godfrey Phillips India (1.14).

Among most active underlying, ICICI Bank witnessed a contraction of 3.15 million units of Open Interest in the February month futures contract, followed by Tata Steel witnessing an addition of 1.43 million units of Open Interest in the February month contract, Reliance Industries witnessed a contraction of 0.84 million units of Open Interest in the February month contract, State Bank of India witnessed a contraction of  2.30 million units of Open Interest in the February month contract and Housing Development Finance Corporation witnessed  a contraction of 0.38 million units of Open Interest in the February month future contract.