Nifty closes in red terrain on Thursday

Key Indian equity benchmark Nifty closed in red terrain on Thursday. The index made a slightly positive start, backed by report that the Centre has contained its fiscal deficit for FY18 at 3.42% of gross domestic product (GDP), down from 3.5% estimated (RE) when Budget FY19 was presented on February 1. An Rs 85,000 crore (3.8%) reduction in expenditure from the RE level of Rs 22.18 lakh crore and a marginal upward revision in nominal GDP in the second advance estimate (the Budget relied on the first advance estimate) allowed the government to curb the deficit. However, the Nifty failed to hold the gaining momentum and soon slipped into red territory, amid report that total investments via participatory notes (P-notes) into Indian capital markets plunged to a 9-year low of Rs 1 lakh crore in April amid stringent norms put in place by the Securities and Exchange Board of India to check the misuse of these instruments. Some concerns also came with credit rating agency, Care Ratings’ latest report stating that overall Non-performing Assets (NPAs) in the banking sector surged by 32.7% to Rs 3.46 lakh crore at the end of March 2018 from Rs 2.61 lakh crore in the year-ago period. The markets participants paid no heed towards report that there was a 23% jump in venture investments in April at $2.4 billion, led by e-commerce, infrastructure and realty plays by funds. The report added that the increase in activity was driven largely by a jump in deal sizes, it said, pointing out that going by the number of deals, there were 69 transactions this April as against 66 in the year-ago period. 

All the sectoral indices ended in red on the NSE except Pharma and Realty. The top gainers from the F&O segment were Reliance Communications, Reliance Naval and Engineering and Petronet LNG. On the other hand, the top losers were PTC India, Gujarat State Fertilizers & Chemicals and TVS Motor. 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 decreased by 0.20% and reached 13.40. The 50-share Nifty was down by 58.40 points or 0.54% to settle at 10,682.70.

Nifty May 2018 futures closed at 10696.20 on Thursday, at a premium of 13.50 points over spot closing of 10682.70, while Nifty June 2018 futures ended at 10709.05, at a premium of 26.35 points over spot closing.  Nifty May futures saw a contraction of 0.08 million (mn) units, taking the total outstanding open interest (OI) to 23.53 mn units. The near month derivatives contract will expire on May 31, 2018.

From the most active contracts, Bajaj Finance May 2018 futures traded at a premium of 1.50 points at 2069.45 compared with spot closing of 2067.95. The numbers of contracts traded were 41,355.

Tata Steel May 2018 futures traded at a premium of 1.30 points at 611.60 compared with spot closing of 610.30. The numbers of contracts traded were 35,196.

Sun Pharmaceutical May 2018 futures traded at a discount of 2.15 points at 482.60 compared with spot closing of 484.75. The numbers of contracts traded were 16,082.

Punjab National Bank May 2018 futures traded flat at 76.55 compared with spot closing of 76.55. The numbers of contracts traded were 14,739.

Tata Motors May 2018 futures traded at a premium of 1.30 points at 315.85 compared with spot closing of 314.55. The numbers of contracts traded were 14,708. 

Among Nifty calls, 10800 SP from the May month expiry was the most active call with an addition of 0.55 million open interests. Among Nifty puts, 10700 SP from the May month expiry was the most active put with a contraction of 0.06 million open interests. The maximum OI outstanding for Calls was at 11000 SP (5.70mn) and that for Puts was at 10500 SP (5.33mn). The respective Support and Resistance levels of Nifty are: Resistance 10,751.80 ---- Pivot Point 10,708.15 --- Support --- 10639.05.

The Nifty Put Call Ratio (PCR) finally stood at 1.17 for May month contract. The top five scrips with highest PCR on OI were Asian Paint (1.66), Dish TV (1.53), AXIS Bank (1.37), Infibeam Incorporation (1.31) and Hindustan Unilever (1.17).

Among most active underlying, Bajaj Finance witnessed an addition of 0.46 million units of Open Interest in the May month futures contract, followed by Tata Steel witnessing an addition of 0.71 million units of Open Interest in the May month contract, Reliance Industries witnessed an addition of 1.15 million units of Open Interest in the May month contract, Escorts witnessed an addition of 0.08 million units of Open Interest in the May month contract and Hindalco Industries witnessed an addition of 1.96 million units of Open Interest in the May month future contract.