Nifty erases initial gains to close 1% lower

Key Indian equity benchmark Nifty erased all its initial gains on Tuesday to close 1 per cent lower, despite firm global cues. The index traded in an optimistic mood for the most part of the session, aided by credit rating agency, Crisil Ratings’ latest report that India’s gross domestic product (GDP) growth will improve sharply to 7.5% in the next fiscal year 2018-19 (FY19) and added that the country’s GDP will grow at the rate of 6.5% in the current fiscal year (FY18). Traders took some support with the State Bank of India’s (SBI) Research report stating that the GST collections will grow in the range of 14-16% during the fiscal year 2018-19 (FY19), similar to the decadal gross tax revenue growth rate at 13.9%. Some support also came with the report that the Reserve Bank of India will infuse adequate additional liquidity of Rs 1 lakh crore in the banking system during March 2018, through longer term variable rate repo operations, with an aim to address additional demand for liquidity and to provide flexibility to banks in its liquidity management towards March-end. However, last hour sell-off dragged the market lower below a crucial psychological level of 10,250. Investors got wary with a private report that deteriorating state government finances pose a risk to India, which already boasts the second-largest budget deficit among major economies. Some concerns also came with Icra’s latest report that the pace of growth in country's apparel exports will depend on the industry’s ability to wade through the new taxation and export incentive regime and intense global competition.

All the sectoral indices ended in red on the NSE except Media. The top gainers from the F&O segment were Bharat Petroleum Corporation, Indraprastha Gas and PC Jeweller. On the other hand, the top losers were Adani Enterprises, BEML and Balrampur Chini Mills. In the index option segment, maximum OI continues to be seen in the 10,500-10,800 calls and 10,000-10,200 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 5.52% and reached 16.24. The 50-share Nifty was down by 109.60 points or 1.06% to settle at 10,249.25.

Nifty March 2018 futures closed at 10248.55 on Tuesday, at a discount of 0.70 points over spot closing of 10249.25, while Nifty April 2018 futures ended at 10281.55, at a premium of 32.30 points over spot closing. Nifty March futures saw an addition of 1.18 million (mn) units, taking the total outstanding open interest (OI) to 24.28 mn units. The near month derivatives contract will expire on March 28, 2018.

From the most active contracts, ICICI Bank March 2018 futures traded at a premium of 1.45 points at 296.20 compared with spot closing of 294.75. The numbers of contracts traded were 21,045.

Sun Pharmaceutical March 2018 futures traded at a premium of 2.45 points at 532.90 compared with spot closing of 530.45. The numbers of contracts traded were 18,796.

Tata Steel March 2018 futures traded at a discount of 5.10 points at 654.40 compared with spot closing of 659.50. The numbers of contracts traded were 18,769.

State Bank of India March 2018 futures traded at a premium of 1.65 points at 257.00 compared with spot closing of 255.35. The numbers of contracts traded were 18,607.

Axis Bank March 2018 futures traded at a premium of 4.70 points at 517.20 compared with spot closing of 512.50. The numbers of contracts traded were 16,699.

Among Nifty calls, 10500 SP from the March month expiry was the most active call with an addition of 0.66 million open interests. Among Nifty puts, 10300 SP from the March month expiry was the most active put with a contraction of 0.23 million open interests. The maximum OI outstanding for Calls was at 10500 SP (4.59mn) and that for Puts was at 10000 SP (3.71mn). The respective Support and Resistance levels of Nifty are: Resistance 10,388.43 ---- Pivot Point 10,302.17 --- Support --- 10162.98

The Nifty Put Call Ratio (PCR) finally stood at 0.80 for March month contract. The top five scrips with highest PCR on OI were OIL (1.78), Repco Home Finance (1.70), Cummins India (1.43), V Guard (1.39) and Indiabulls Housing Finance (1.12).

Among most active underlying, ICICI Bank witnessed an addition of 2.05 million units of Open Interest in the March month futures contract, followed by Reliance Industries witnessing an addition of 0.97 million units of Open Interest in the March month contract, State Bank of India witnessed an addition of 2.60 million units of Open Interest in the March month contract, Maruti Suzuki India witnessed an addition of 0.06 million units of Open Interest in the March month contract and Tata Steel witnessed an addition of 0.03 million units of Open Interest in the March month future contract.