Nifty extend southward journey for fifth straight day

Extending southward journey for fifth straight session, key equity benchmark Nifty ended the Monday’s trade in red terrain, declining below its crucial 10,700 mark as traders remained on sidelines ahead of ahead of Reserve Bank of India’s (RBI’s) monetary policy meeting to be start from tomorrow. Market traded in red throughout the session as sentiments remained dampened with Fitch Ratings’ statement that high debt burden of the government constrains India’s rating upgrade, after Finance Minister Arun Jaitley projecting a fiscal deficit of 3.5 per cent of GDP against the earlier target of 3.2 per cent. Besides, the US-based agency had kept India’s sovereign rating unchanged at ‘BBB-’, the lowest investment grade with stable outlook, citing weak fiscal position. Traders paid no heed towards report that the Indian service sector remained in expansion mode in January, registering the fastest rise in activity in three months driven by a renewed increase in new business orders. The seasonally adjusted Nikkei Services Business Activity Index improved to 51.7 in January, up from 50.9 in December.

Traders were seen piling up positions in Auto, PSU Bank and Pharma stocks, while selling was witnessed in Financial Services, Metal and IT. The top gainers from the F&O segment were PC JEwellers, JP Associates and Can Fin Homes. On the other hand, the top losers were Fortis Healthcare, Ajanta Pharma and SREI Infra. In the index option segment, maximum OI continues to be seen in the 10,500-11,600 calls and 10000-11000 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 5.26% and reached 16.05. The 50-share Nifty was down by 94.05 points or 0.87% to settle at 10,666.55.

Nifty February 2018 futures closed at 10684.60 on Monday, at a premium of 18.05 points over spot closing of 10,666.55, while Nifty March 2018 futures ended at 10705.70, at a premium of 39.15 points over spot closing. Nifty February futures saw a contraction of 0.95 million (mn) units, taking the total outstanding open interest (OI) to 21.90 mn units. The near month derivatives contract will expire on February 22, 2018.

From the most active contracts, PC Jeweller February 2018 futures traded at a discount of 3.65 points at 423.35 compared with spot closing of 427.00. The numbers of contracts traded were 35,580.

HDFC Bank February 2018 futures traded at a premium of 8.10 points at 1833.05 compared with spot closing of 1824.95. The numbers of contracts traded were 15,911.

Reliance Industries 2018 futures traded at a discount of 0.95 points at 906.05 compared with spot closing of 907. The numbers of contracts traded were 15,652.

State Bank of India February 2018 futures traded at a discount of 0.65 points at 298.35 compared with spot closing of 299. The numbers of contracts traded were 15,923.

Maruti Suzuki India February 2018 futures traded at a discount of 19.70 point at 9099.2 compared with spot closing of 9118.9. The numbers of contracts traded were 19,241.

Among Nifty calls, 11000 SP from the February month expiry was the most active call with a contraction of 0.15 million open interests. Among Nifty puts, 10500 SP from the February month expiry was the most active put with an addition of 0.09 million open interests.  The maximum OI outstanding for Calls was at 11500 SP (6.22 mn) and that for Puts was at 10500 SP (6.07 mn). The respective Support and Resistance levels of Nifty are: Resistance 10717.27 --- Pivot Point 10652.03 --- Support --- 10601.32.

The Nifty Put Call Ratio (PCR) finally stood at 0.84 for February month contract. The top five scrips with highest PCR on OI were Godfrey Phillips India (1.29), ICICI Bank (1.18), Tech Mahindra (1.09), SREI Infrastructure Finance (1.01) and Oracle Financial Services Software (1.00).

Among most active underlying, PC Jeweller witnessed a contraction of 1.74 million units of Open Interest in the February month futures contract, followed by Reliance Industries witnessing a contraction of 0.94 million units of Open Interest in the February month contract, Maruti Suzuki India witnessed a contraction of 0.06 million units of Open Interest in the February month contract, Housing Development Finance Corporation witnessed an addition of  0.27 million units of Open Interest in the February month contract and State Bank of India India witnessed  a contraction of 2.09 million units of Open Interest in the February month future contract.