Nifty ends lower on Thursday; snaps 3 day winning streak

Snapping its three day winning streak, Key Indian benchmark Nifty ended lower on Thursday, with losses of around quarter a percent. The index made a positive start, as the domestic sentiments got some support with India Ratings and Research (Ind-Ra) report stating that the Indian economy is gradually recovering from note ban and Goods and Service Tax (GST) shocks, with improving major macro parameters like manufacturing, capital goods production, non-food credit and consumption. The ratings agency, however, cautioned on the possible widening of the current account deficit (CAD) due to rising oil prices which was creating pressure on the currency. Traders also took some encouragement with Commerce Secretary Rita Teaotia’s statement that the commerce ministry is working with different ministries to formulate separate plans for 12 services sector, including IT, tourism and logistics, with a view to boost growth in these segments. However, the market failed to hold the gaining momentum and entered red terrain, as anxiety spread on the street with Assocham’s statement that President Donald Trump’s announcement of the US pulling out from the Iran deal will exert pressure on fuel prices and affect the Indian economy on the downside. Some concerns also came after International Monetary Fund (IMF) in its report highlighted that in India, given increased inflation pressure, monetary policy should maintain a tightening bias. The advice came at a time when oil poses an upside risk to the inflation. Earlier, the Monetary Policy Committee (MPC) had raised several areas of concerns, including high and volatile crude prices. The other areas were an increase in minimum support prices for farmers, house rent allowance (HRA) revision and volatile crude oil prices, indicating a tightening of the policy regime in the coming months. 

All the sectoral indices ended in red on the NSE. The top gainers from the F&O segment were Hexaware Technologies, Oil & Natural Gas Corporation and Bharti Airtel. On the other hand, the top losers were Federal Bank, Indian Bank and Strides Shasun. 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 1.07% and reached 14.42. The 50-share Nifty was down by 25.15 points or 0.23% to settle at 10,716.55.

Nifty May 2018 futures closed at 10724.90 on Thursday, at a premium of 8.35 points over spot closing of 10716.55, while Nifty June 2018 futures ended at 10735.30, at a premium of 18.75 points over spot closing. Nifty May futures saw a contraction of 0.31 million (mn) units, taking the total outstanding open interest (OI) to 24.07 mn units. The near month derivatives contract will expire on May 31, 2018. 

From the most active contracts, Federal Bank May 2018 futures traded at a premium of 0.05 points at 89.60 compared with spot closing of 89.55. The numbers of contracts traded were 32,460. 

Jindal Steel & Power May 2018 futures traded at a discount of 0.75 points at 245.10 compared with spot closing of 245.85. The numbers of contracts traded were 25,968. 

Indian Bank May 2018 futures traded at a premium of 0.30 points at 313.30 compared with spot closing of 313.00. The numbers of contracts traded were 19,153. 

Tata Motors May 2018 futures traded at a premium of 1.25 points at 334.75 compared with spot closing of 333.50. The numbers of contracts traded were 17,054. 

Jubilant Foodworks May 2018 futures traded at a premium of 9.25 points at 2487.25 compared with spot closing of 2478.00. The numbers of contracts traded were 16,937.

Among Nifty calls, 10800 SP from the May month expiry was the most active call with an addition of 0.15 million open interests. Among Nifty puts, 10700 SP from the May month expiry was the most active put with an addition of 0.31 million open interests. The maximum OI outstanding for Calls was at 11000 SP (5.82mn) and that for Puts was at 10500 SP (5.46mn). The respective Support and Resistance levels of Nifty are: Resistance 10,766.40 ---- Pivot Point 10,735.70 --- Support --- 10685.85.

The Nifty Put Call Ratio (PCR) finally stood at 1.28 for May month contract. The top five scrips with highest PCR on OI were Infibeam Incorporation (1.52), Dish TV (1.46), AXIS Bank (1.43), ICICI Bank (1.38) and Ajanta Pharma (1.16).

Among most active underlying, Federal Bank witnessed an addition of 19.31 million units of Open Interest in the May month futures contract, followed by Jindal Steel & Power witnessing a contraction of 2.14 million units of Open Interest in the May month contract, ICICI Bank witnessed a contraction of 1.56 million units of Open Interest in the May month contract, Reliance Industries witnessed a contraction of 0.18 million units of Open Interest in the May month contract and HDFC Bank witnessed a contraction of 0.49 million units of Open Interest in the May month future contract.