Nifty ends lower for third consecutive session

The local equity benchmark Nifty ended lower for third consecutive session on Tuesday, following other weak Asian markets. The index traded in green terrain for the most part of the day, aided by the commerce minister Suresh Prabhu’s statement that the government will soon come out with a comprehensive strategy to increase the share of exports to 40% of the gross domestic product (GDP) and is expected to touch $5 trillion by 2025. Traders took support with a leading lobby group, National Association of Software and Services Companies’ (NASSCOM) statement that India’s software services sector will see revenue growth of 7-9 percent in constant currency terms in the fiscal year to March 2019. Sentiments were also supported by Prime Minister Narendra Modi’s statement that government’s budget reforms have created a new work culture and they are transforming the socio-economic landscape of the country. Besides, adding some optimism, the Union Cabinet approved extra-budgetary support for government’s flagship housing scheme Pradhan Mantri Awas Yojana (Urban) and approved opening up of coal mining to the private sector for commercial use, a major reform in the sector since its nationalisation in 1973. However, in the last leg of trade, the Nifty failed to hold gains and settled lower, on the back of profit booking. Anxiety remained among the market participants, after recent developments with the loan fraud in PNB. The Central Bureau of Investigation arrested three more employees of PNB on Monday over a $1.77 billion loan fraud, and the government said the scandal exposed a supervisory failure by the Reserve Bank of India (RBI).

All the sectoral indices ended in red on the NSE except IT, Media, Metal and PSU Bank. The top gainers from the F&O segment were Syndicate Bank, Fortis Healthcare and Apollo Tyres. On the other hand, the top losers were Biocon, Muthoot Finance and Voltas. In the index option segment, maximum OI continues to be seen in the 10,600-11,100 calls and 10,000-10,300 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 1.20% and reached 16.86. The 50-share Nifty was down by 18.00 points or 0.17% to settle at 10,360.40.

Nifty February 2018 futures closed at 10343.75 on Tuesday, at a discount of 16.65 points over spot closing of 10360.40, while Nifty March 2018 futures ended at 10371.40, at a premium of 11.00 points over spot closing. Nifty February futures saw a contraction of 1.40 million (mn) units, taking the total outstanding open interest (OI) to 20.33 mn units. The near month derivatives contract will expire on February 22, 2018.

From the most active contracts, Punjab National Bank February 2018 futures traded at a discount of 0.35 points at 116.70 compared with spot closing of 117.05. The numbers of contracts traded were 50,885.

SBI February 2018 futures traded at a premium of 0.40 points at 269.90 compared with spot closing of 269.50. The numbers of contracts traded were 29,482.

Infosys February 2018 futures traded at a discount of 0.20 points at 1134.80 compared with spot closing of 1135.00. The numbers of contracts traded were 25,417.

Tata Steel February 2018 futures traded at a discount of 0.90 points at 650.30 compared with spot closing of 651.20. The numbers of contracts traded were 21,622.

Vedanta February 2018 futures traded at a discount of 0.75 points at 328.25 compared with spot closing of 329.00. The numbers of contracts traded were 20,013.

Among Nifty calls, 10400 SP from the February month expiry was the most active call with an addition of 0.42 million open interests. Among Nifty puts, 10300 SP from the February month expiry was the most active put with an addition of 0.91 million open interests. The maximum OI outstanding for Calls was at 11100 SP (4.84 mn) and that for Puts was at 10300 SP (5.48 mn). The respective Support and Resistance levels of Nifty are: Resistance 10,410.62 --- Pivot Point 10,379.13 --- Support --- 10,328.92.

The Nifty Put Call Ratio (PCR) finally stood at 0.82 for February month contract. The top five scrips with highest PCR on OI were V Guard (1.20), DCB Bank (1.03), Cholamandalam Investment and Finance (1.00), MRF (1.00), Oracle Financial Services Software (1.00) and Asian Paints (0.95).

Among most active underlying, State Bank of India witnessed a contraction of 14.82 million units of Open Interest in the February month futures contract, followed by Punjab National Bank witnessing a contraction of 0.80 million units of Open Interest in the February month contract, Reliance Industries witnessed a contraction of 5.56 million units of Open Interest in the February month contract,  Infosys witnessed an contraction of 8.38 million units of Open Interest in the February month contract and Tata Steel witnessed an addition of 4.35 million units of Open Interest in the February month future contract.