Nifty snaps three-day gaining streak

Snapping three-day gaining streak, key Indian equity benchmark Nifty ended lower on Tuesday, with losses of over 0.50%. After a cautious start, the index entered into green terrain, supported by Economic Affairs Secretary Subhash Chandra Garg’s statement that the Indian economy is likely to grow between 7.3% to 7.5% in Q4FY18 and about 6.7% during the fiscal year 2017-18. Some support also came after the Finance Ministry clarified applicability of the Goods and Services Tax (GST) on farmers. It has said that support services like renting or leasing of land by farmers for agriculture, forestry, fishing or animal husbandry are exempt from the ambit of new indirect tax. Adding some support, the India Meteorological Department (IMD) said that the southwest monsoon hit Kerala today, three days before its scheduled arrival. The onset of monsoon over the southern state marks the commencement of the four-month long rainy season in the country. The IMD has made a forecast of normal rainfall this season. However, in second half of the session, the Nifty erased all of its gains and closed on a negative note, on the back of heavy profit booking in recent gainers coupled with weakness in global markets. Domestic sentiments also got hit with a private report stating that the June policy review meeting is likely to be a close call, while the tone of the policy statement is expected to remain hawkish.  

All the sectoral indices ended in red on the NSE except Auto, IT and Metal. The top gainers from the F&O segment were Bharat Heavy Electricals, Reliance Communications and United Breweries. On the other hand, the top losers were Bank of India, Jubilant Foodworks and Godfrey Phillips India. 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 0.11% and reached 13.07. The 50-share Nifty was down by 55.35 points or 0.52% to settle at 10,633.30.

Nifty May 2018 futures closed at 10615.55 on Tuesday, at a discount of 17.75 points over spot closing of 10633.30, while Nifty June 2018 futures ended at 10628.05, at a discount of 5.25 points over spot closing.  Nifty May futures saw a contraction of 1.90 million (mn) units, taking the total outstanding open interest (OI) to 18.96 mn units. The near month derivatives contract will expire on May 31, 2018.

From the most active contracts, Vedanta May 2018 futures traded at a premium of 0.05 points at 252.70 compared with spot closing of 252.65. The numbers of contracts traded were 31,440.

Aurobindo Pharma May 2018 futures traded at a premium of 0.35 points at 578.35 compared with spot closing of 578.00. The numbers of contracts traded were 24,415.

Sun Pharmaceutical May 2018 futures traded at a discount of 0.05 points at 498.30 compared with spot closing of 498.35. The numbers of contracts traded were 24,284.

Tata Motors May 2018 futures traded at a premium of 1.00 points at 294.20 compared with spot closing of 293.20. The numbers of contracts traded were 22,706.

Larsen & Toubro May 2018 futures traded at a discount of 3.45 points at 1377.55 compared with spot closing of 1381.00. The numbers of contracts traded were 22,680.

Among Nifty calls, 10700 SP from the May month expiry was the most active call with an addition of 1.26 million open interests. Among Nifty puts, 10600 SP from the May month expiry was the most active put with a contraction of 0.38 million open interests. The maximum OI outstanding for Calls was at 10800 SP (5.60mn) and that for Puts was at 10500 SP (4.99mn). The respective Support and Resistance levels of Nifty are: Resistance 10,695.00 ---- Pivot Point 10,655.55 --- Support --- 10593.85.

The Nifty Put Call Ratio (PCR) finally stood at 1.20 for May month contract. The top five scrips with highest PCR on OI were Just Dial (1.73), Pidilite Industries (1.47), State Bank of India (1.45), Dish TV (1.43) and Axis Bank (1.38).

Among most active underlying, Larsen & Toubro witnessed a contraction of 2.08 million units of Open Interest in the May month futures contract, followed by Reliance Industries witnessing a contraction of 4.55 million units of Open Interest in the May month contract, State Bank of India witnessed a contraction of 15.77 million units of Open Interest in the May month contract, Maruti Suzuki witnessed a contraction of 0.35 million units of Open Interest in the May month contract and HDFC Bank witnessed a contraction of 4.48 million units of Open Interest in the May month future contract.