Nifty ends flat with negative bias

Key Indian equity benchmark Nifty ended flat with a negative bias on Tuesday. After a cautious start, the index immediately gained traction and traded jubilantly for most part of the session, supported by credit rating agency, India Ratings and Research’s (Ind-Ra) latest report stating that corporate outlook is expected to remain stable in the current fiscal year, with profitability improvement in the last fiscal year. Traders also took some encouragement with a private report stating that India’s GDP is expected to grow by 7.7% in January-March, up from 7.2% in the preceding quarter, despite moderation in factory output growth in March. Meanwhile, another private report said that capex by Indian companies is slowly making a comeback as Tata Steel, Ambuja Cements, Eicher Motors, Hero MotoCorp, Asian Paints, CEAT, Apollo Tyres and Jubilant FoodWorks among other companies have announced investments totaling Rs 50,000 crore in the past four months. However, in the last leg of trade, Nifty erased all of its gains and closed in red terrain, after reports of alliance of Congress and JD(S) in Karnataka. According to media reports, JD(S) has accepted Congress’ proposal of making HD Kumaraswamy the state’s chief minister. Some concerns came with report highlighting that India’s retail inflation inched up to 4.58% in the month of April 2018, as compared to 4.28% in March 2018 and 2.99% in April 2017, reversing the easing trend of last three months. Some anxiety also spread among market participants with CARE Ratings’ report stating that the Reserve Bank of India (RBI) may go for a rate change in case inflation touches 5% mark.  

Traders were seen piling up positions in IT, Metal and Financial Services stocks, while selling was witnessed in Pharma, Media and FMCG sector stocks. The top gainers from the F&O segment were Just Dial, Colgate Palmolive (India) and Siemens. On the other hand, the top losers were Allahabad Bank, NCC and Reliance Communications.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 7.58% and reached 13.16. The 50-share Nifty was down by 4.75 points to settle at 10,801.85.

Nifty May 2018 futures closed at 10818.60 on Tuesday, at a premium of 16.75 points over spot closing of 10801.85, while Nifty June 2018 futures ended at 10824.25, at a premium of 22.40 points over spot closing. Nifty May futures saw a contraction of 0.52 million (mn) units, taking the total outstanding open interest (OI) to 24.03 mn units. The near month derivatives contract will expire on May 31, 2018.

From the most active contracts, Tata Steel May 2018 futures traded at a premium of 0.20 points at 627.20 compared with spot closing of 627.00. The numbers of contracts traded were 31,544.

BEML May 2018 futures traded at a premium of 4 points at 1068.00 compared with spot closing of 1064.00. The numbers of contracts traded were 29,287.

Lupin May 2018 futures traded at a discount of 10.15 points at 753.35 compared with spot closing of 763.50. The numbers of contracts traded were 28,020.

Tata Motors May 2018 futures traded at a premium of 0.95 points at 311.65 compared with spot closing of 310.70. The numbers of contracts traded were 25,798.

State Bank of India May 2018 futures traded at a premium of 0.20 points at 246.75 compared with spot closing of 246.55. The numbers of contracts traded were 18,732.

Among Nifty calls, 11000 SP from the May month expiry was the most active call with an addition of 0.22 million open interests. Among Nifty puts, 10800 SP from the May month expiry was the most active put with an addition of 0.87 million open interests. The maximum OI outstanding for Calls was at 11000 SP (6.37 mn) and that for Puts was at 10500 SP (6.06 mn). The respective Support and Resistance levels of Nifty are: Resistance 10893.57---- Pivot Point 10837.48--- Support --- 10745.77.

The Nifty Put Call Ratio (PCR) finally stood at 1.33 for May month contract. The top five scrips with highest PCR on OI were Asian Paint (1.63), Dish TV (1.56), Axis Bank (1.49), Infibeam Incorporation (1.44) and ICICI Bank (1.38).

Among most active underlying, Tata Steel witnessed an addition of 0.79 million units of Open Interest in the May month futures contract, followed by ICICI Bank witnessing a contraction of 1.35 million units of Open Interest in the May month contract, Reliance Industries witnessed a contraction of 0.61 million units of Open Interest in the May month contract, State Bank of India witnessed an addition of 0.85 million units of Open Interest in the May month contract and HDFC Bank witnessed a contraction of 0.52 million units of Open Interest in the May month future contract.