Nifty closes lower; breaches 10,550 mark

The local benchmark -- Nifty -- ended lower on Monday, with the losses of 0.75 per cent. The index made a positive start supported by the economic affairs secretary Subhash Chandra Garg’s statement that the constant rise in global oil prices and hardening bond yields will not have any impact on the economic growth of India. He added that the growth parameters are very sound, macroeconomic parameters also continue to be very sound and inflation is within the range. However, the Nifty failed to hold the gains for a long time and slipped into red terrain, as the domestic sentiments got hit on report that even as monsoon is predicted to be normal this year, its uneven distribution could spike food prices, and inflation is likely to edge further. Besides, some concerns also came with a private report stating that corporate India-especially the chunk comprising over-leveraged companies-is worried about a recent Reserve Bank of India (RBI) circular that says companies with even a day of loan-default can be set on the path of debt resolution and subsequent bankruptcy proceedings. Anxiety also spread on the street with Niti Aayog CEO Amitabh Kant’s statement that achieving 9-10% growth rate in the next 30 years would be a challenge for India, even though the country is expanding at 7.5% growth rate per annum. Traders also got cautious with the Comptroller and Auditor General (CAG) of India Rajiv Mehrishi’s statement that the root cause of Indian banking sector crisis is the problem in the bond market as the Reserve Bank of India (RBI) acts as regulator as well as trader. He noted that the RBI, in its effort to ensure that banks don’t fail, has slowed down giving licences to new banks, so it promotes uncompetitive behavior. 

All the sectoral indices ended in red on the NSE except PSU Bank and IT. The top gainers from the F&O segment were Balrampur Chini Mills, Bank of India and Punjab National Bank. On the other hand, the top losers were Jaiprakash Associates, Strides Shasun and Reliance Communications.  In the index option segment, maximum OI continues to be seen in the 10,600-10,600 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 1.84% and reached 14.41. The 50-share Nifty was down by 79.70 points or 0.75% to settle at 10,516.70.

Nifty May 2018 futures closed at 10538.75 on Monday, at a premium of 22.05 points over spot closing of 10516.70, while Nifty June 2018 futures ended at 10552.35, at a premium of 35.65 points over spot closing.  Nifty May futures saw a contraction of 0.85 million (mn) units, taking the total outstanding open interest (OI) to 23.21 mn units. The near month derivatives contract will expire on May 31, 2018.

From the most active contracts, Century Textiles & Industries May 2018 futures traded at a discount of 10.40 points at 1007.65 compared with spot closing of 1018.05. The numbers of contracts traded were 24,418.

Ashok Leyland May 2018 futures traded at a premium of 0.75 points at 134.50 compared with spot closing of 133.75. The numbers of contracts traded were 20,988.

Strides Shasun May 2018 futures traded at a premium of 2.75 points at 342.75 compared with spot closing of 340.00. The numbers of contracts traded were 20,582.

State Bank of India May 2018 futures traded at a premium of 0.10 points at 244.60 compared with spot closing of 244.50. The numbers of contracts traded were 19,429.

Maruti Suzuki India May 2018 futures traded at a premium of 23.10 points at 8458.05 compared with spot closing of 8434.95. The numbers of contracts traded were 16,127.

Among Nifty calls, 10600 SP from the May month expiry was the most active call with an addition of 1.37 million open interests. Among Nifty puts, 10500 SP from the May month expiry was the most active put with an addition of 0.54 million open interests. The maximum OI outstanding for Calls was at 10800 SP (5.00mn) and that for Puts was at 10500 SP (5.43mn). The respective Support and Resistance levels of Nifty are: Resistance 10,590.33 ---- Pivot Point 10,548.07 --- Support --- 10474.43.

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for May month contract. The top five scrips with highest PCR on OI were Asian Paint (1.58), Dish TV (1.43), Infibeam Incorporation (1.27), AXIS Bank (1.26) and Hindustan Unilever (1.18).

Among most active underlying, Ashok Leyland witnessed an addition of 2.67 million units of Open Interest in the May month futures contract, followed by Maruti Suzuki India witnessing a contraction of 0.10 million units of Open Interest in the May month contract, Reliance Industries witnessed a contraction of 1.90 million units of Open Interest in the May month contract, Tata Consultancy Services witnessed a contraction of 0.13 million units of Open Interest in the May month contract and State Bank of India witnessed a contraction of 2.97 million units of Open Interest in the May month future contract.