Nifty ends lower for seventh straight session

Extending losses for seventh straight session, key Indian equity benchmark Nifty ended in red on Wednesday, as Reserve Bank of India (RBI) kept the key policy rate unchanged at 6% for the third consecutive time in view of firming inflation and Reverse Repo rate was also maintained at 5.75%. After a positive start, the index immediately turned choppy. Traders’ sentiments were pessimistic with BMI Research’s latest report which has revised India’s fiscal deficit forecast to 3.5% of gross domestic product (GDP) for the fiscal year 2018-2019 (FY19) as against its earlier estimate of 3.3%. It also said that there is room for fiscal slippage as the government seeks to achieve its 7.5% growth target. However, the downside remained capped as traders took some comfort with Secretary Hasmukh Adhia’s statement that the import duty hike in 45 items announced in the Budget will earn about Rs 7,000 crore revenue to the government and is mainly intended to give a push to the MSMEs for domestic manufacturing. Some relief also came with the report that as many as 67 foreign direct investment proposals worth Rs 11,703 crore were approved during the first nine months of the ongoing fiscal. Traders took note of State Bank of India (SBI) research’s latest report stating that the government’s decision to fix the minimum support price (MSP) of kharif crops like paddy at least 50 percent higher than the cost of production, will have marginal impact on India's inflation. The report also pointed out that an early implementation of the MSP scheme that will be 1.5 times higher than farmers' production costs along with price compensation support and other innovative schemes for the rural sector will pave the way for a transformational change in rural economy going forward.

Traders were seen piling up positions in Realty, Pharma and Media stocks, while selling was witnessed in IT, Banking and Financial Services stocks. The top gainers from the F&O segment were Fortis Healthcare, Bharat Electronics and Hindustan Petroleum Corporation. On the other hand, the top losers were Hexaware Technologies, United Breweries and Siemens. In the index option segment, maximum OI continues to be seen in the 11,000-11,500 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 2.75% and reached 19.46. The 50-share Nifty was down by 21.55 points or 0.21% to settle at 10,476.70.

Nifty February 2018 futures closed at 10465.55 on Wednesday, at a discount of 11.15 points over spot closing of 10476.70, while Nifty March 2018 futures ended at 10479.55, at a premium of 2.85 points over spot closing. Nifty February futures saw a contraction of 0.03 million (mn) units, taking the total outstanding open interest (OI) to 21.66 mn units. The near month derivatives contract will expire on February 22, 2018.

From the most active contracts, Vedanta February 2018 futures traded at a premium of 2.30 points at 315.50 compared with spot closing of 313.20. The numbers of contracts traded were 20,194.

State Bank of India February 2018 futures traded at a premium of 0.70 points at 292.80 compared with spot closing of 292.10. The numbers of contracts traded were 16,373.

Lupin 2018 futures traded at a premium of 4.30 points at 808.70 compared with spot closing of 804.40. The numbers of contracts traded were 15,690.

Tata Motors February 2018 futures traded at a discount of 0.25 points at 377.75 compared with spot closing of 378.00. The numbers of contracts traded were 15,641.

Tata Steel February 2018 futures traded at a premium of 2.45 point at 661.55 compared with spot closing of 659.10. The numbers of contracts traded were 15,220.

Among Nifty calls, 10700 SP from the February month expiry was the most active call with an addition of 0.77 million open interests. Among Nifty puts, 10300 SP from the February month expiry was the most active put with a contraction of 0.03 million open interests.  The maximum OI outstanding for Calls was at 11500 SP (5.70 mn) and that for Puts was at 10000 SP (5.67 mn). The respective Support and Resistance levels of Nifty are: Resistance 10578.33--- Pivot Point 10512.37--- Support --- 10410.73.

The Nifty Put Call Ratio (PCR) finally stood at 0.77 for February month contract. The top five scrips with highest PCR on OI were Godfrey Phillips India (1.36), V-Guard Industries (1.20), ICICI Bank (1.15), Oracle Financial Services Software (1.00) and Asian Paints (0.94).

Among most active underlying, Reliance Industries witnessed an addition of 1.44 million units of Open Interest in the February month futures contract, followed by State Bank of India witnessing an addition of 2.88 million units of Open Interest in the February month contract, Ashok Leyland witnessed an addition of 0.52 million units of Open Interest in the February month contract, Maruti Suzuki India  witnessed an addition of  0.06 million units of Open Interest in the February month contract and Tata Motors witnessed  an addition of 1.15 million units of Open Interest in the February month future contract.