Nifty extends losses for second straight day; ends below 10,700 mark

The local equity benchmark Nifty ended lower on Thursday below 10,700 mark, extending its losses for the second straight session. The index traded on a volatile note throughout the session, amid report stating that India has dropped by three spots to eleventh position in global consultants AT Kearney’s Foreign Direct Investment (FDI) Confidence Index 2018, snapping its two-year rising streak in the rankings. Some cautiousness also came with Reserve Bank of India’s report that the country’s multiple revisions of gross domestic product growth estimates are ‘confusing,' much less provide a true state of the economy. Domestic sentiments also got hit with a private report highlighting that tax authorities have asked many companies to reverse claims of input credit made on investments in mutual funds and other securities, in a move that could increase the tax burden on corporate India. The report added that notices were recently issued to companies such as Mahindra & Mahindra, Japanese automobile giant Honda, South Korean major Hyundai and pharma company Cipla, informing them that their claims of input tax credit on non-core services would not be allowed. However, in the second half of the session, the Nifty trimmed its losses, supported by the BMI Research’s latest report predicting that the Indian economy is likely to grow at 7.3% in the current financial year (FY19) from 6.6% rate reported in the previous year (FY18) on account of robust activity from the construction, manufacturing, and services sectors. But, even after paring its losses, the market failed to enter green terrain and ended with marginal losses.

Traders were seen piling up positions in Metal, PVT Bank and Financial Service stocks, while selling was witnessed in IT, FMCG and Realty. The top gainers from the F&O segment were PC Jeweller, Manappuram Finance and Sun Pharmaceutical. On the other hand, the top losers were Hindustan Construction, Jet Airways and InterGlobe Aviation. In the index option segment, maximum OI continues to be seen in the 10,800-11,000 calls and 10,300-10,500 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 1.13% and reached 12.98. The 50-share Nifty was down by 38.40 points or 0.36% to settle at 10,679.65.

Nifty May 2018 futures closed at 10706.50 on Thursday, at a premium of 26.85 points over spot closing of 10679.65, while Nifty June 2018 futures ended at 10719.45, at a premium of 39.80 points over spot closing. Nifty May futures saw a contraction of 0.003 million (mn) units, taking the total outstanding open interest (OI) to 23.72 mn units. The near month derivatives contract will expire on May 31, 2018.

From the most active contracts, InterGlobe Aviation May 2018 futures traded at a premium of 12.10 points at 1212.15 compared with spot closing of 1200.05. The numbers of contracts traded were 35,628.

PC Jeweller May 2018 futures traded at a discount of 1.60 points at 121.30 compared with spot closing of 122.90. The numbers of contracts traded were 35,131.

Yes Bank May 2018 futures traded at a premium of 2.80 points at 356.25 compared with spot closing of 353.45. The numbers of contracts traded were 18,545.

Sun Pharmaceutical May 2018 futures traded at a premium of 3.40 points at 537.15 compared with spot closing of 533.75. The numbers of contracts traded were 17,972.

Jet Airways May 2018 futures traded at a premium of 3.25 points at 523.25 compared with spot closing of 520.00. The numbers of contracts traded were 17,964.

Among Nifty calls, 10800 SP from the May month expiry was the most active call with an addition of 0.27 million open interests. Among Nifty puts, 10700 SP from the May month expiry was the most active put with a contraction of 0.05 million open interests. The maximum OI outstanding for Calls was at 11000 SP (5.97mn) and that for Puts was at 10500 SP (4.50mn). The respective Support and Resistance levels of Nifty are: Resistance 10,717.68 ---- Pivot Point 10,682.57 --- Support --- 10644.53.

The Nifty Put Call Ratio (PCR) finally stood at 1.18 for May month contract. The top five scrips with highest PCR on OI were Dish TV (1.75), Infibeam Incorporation (1.68), AXIS Bank (1.34), Godrej Consumer Products (1.25) and MRF (1.00).

Among most active underlying, InterGlobe Aviation witnessed an addition of 0.40 million units of Open Interest in the May month futures contract, followed by Reliance Industries witnessing a contraction of 0.68 million units of Open Interest in the May month contract, Yes Bank witnessed an addition of 1.00 million units of Open Interest in the May month contract, Axis Bank witnessed a contraction of 1.10 million units of Open Interest in the May month contract and HDFC witnessed an addition of 0.07 million units of Open Interest in the May month future contract.