Nifty ends lower for third straight session

The local equity benchmark Nifty ended lower for third straight session on Tuesday, breaching its crucial psychological level of 10,600.  After a cautious start, the index traded lackluster throughout the session, as anxiety remained among the traders with Commerce and Industry Minister Suresh Prabhu’s statement that unilateral trade restrictive actions by some developed countries could derail the fragile global economic recovery which would have implications on job scenario. The market participants also got worried with a report stating that while the demand for Indian goods has been on a decline in the Chinese market, India’s increasing dependence on China for items such as electric equipment, machines, medical and surgical instruments and fertilizers, among others, is widening India’s trade deficit with the country. Adding some worries on the street, India’s services sector lost its momentum in the month of May, falling to a three-month low, on a broad stagnation in new orders. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index contracted to 49.6 in the month of May from 51.4 in April. The Nikkei India Composite PMI Output Index, which measures both manufacturing and services, also fell to 50.4 in May from 51.9 in April. Further, sentiments also got hit with S&P Global’s chief economist statement that global economic growth could slow down by 1 percentage point - or more than a quarter of the expansion rates projected by various international bodies - if US President Donald Trump’s tariff threats against China and others escalate into a full-blown trade war. Investors shrugged off with a report stating that markets regulator SEBI drastically slashed the additional expense charged by mutual funds to just 5 basis points to help increase the penetration of such products among investors. The move will help reduce the cost of investing in MFs and industry players believe that it may result in lower commissions for distributors.

All the sectoral indices ended in red on the NSE except Financial Services. The top gainers from the F&O segment were Cipla, Balrampur Chini Mills and Tata Global Beverages. On the other hand, the top losers were Idea Cellular, Reliance Communications and Biocon. In the index option segment, maximum OI continues to be seen in the 10,700-11,000 calls and 10,200-10,500 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 5.38% and reached 13.13. The 50-share Nifty was down by 35.35 points or 0.33% to settle at 10,593.15.

Nifty June 2018 futures closed at 10596.45 on Tuesday, at a premium of 3.30 points over spot closing of 10593.15, while Nifty June 2018 futures ended at 10615.60, at a premium of 22.45 points over spot closing. Nifty July futures saw an addition of 0.12 million (mn) units, taking the total outstanding open interest (OI) to 20.47 mn units. The near month derivatives contract will expire on June 28, 2018.

From the most active contracts, Biocon June 2018 futures traded at a discount of 0.60 points at 608.25 compared with spot closing of 608.85. The numbers of contracts traded were 41,486.

PC Jeweller June 2018 futures traded at a discount of 0.70 points at 129.70 compared with spot closing of 130.40. The numbers of contracts traded were 26,913.

HDFC Bank June 2018 futures traded at a discount of 10.75 points at 2054.10 compared with spot closing of 2064.85. The numbers of contracts traded were 22,366.

Reliance Industries June 2018 futures traded at a discount of 5.55 points at 943.35 compared with spot closing of 948.90. The numbers of contracts traded were 18,949.

Dewan Housing Finance Corporation June 2018 futures traded at a premium of 2.55 points at 605.55 compared with spot closing of 603.00. The numbers of contracts traded were 15,661.

Among Nifty calls, 10700 SP from the June month expiry was the most active call with an addition of 0.14 million open interests. Among Nifty puts, 10500 SP from the June month expiry was the most active put with an addition of 0.15 million open interests. The maximum OI outstanding for Calls was at 11000 SP (4.56mn) and that for Puts was at 10200 SP (3.57mn). The respective Support and Resistance levels of Nifty are: Resistance 10,633.90 ---- Pivot Point 10,592.40 --- Support --- 10551.65.

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for June month contract. The top five scrips with highest PCR on OI were Dish TV (2.71), Ajanta Pharma (2.12), Cummins India (2.09), Max Financial Services (2.00) and Ramco Cements (1.67).

Among most active underlying, HDFC Bank witnessed a contraction of 0.69 million units of Open Interest in the June month futures contract, followed by Reliance Industries witnessing a contraction of 3.71 million units of Open Interest in the June month contract, Biocon witnessed an addition of 0.67 million units of Open Interest in the June month contract, Maruti Suzuki witnessed a contraction of 0.06 million units of Open Interest in the June month contract and Dewan Housing Finance Corporation witnessed an addition of 3.42 million units of Open Interest in the June month future contract.