Nifty ends lower; breaches 10,750 level

The local benchmarks Nifty ended lower on Thursday with the losses of 0.29%, breaching a crucial psychological level of 10,750. The index started on a positive note, as investors took some support with a private report stating that the credit growth in the micro, small and medium enterprises (MSME) sector is improving with the overall exposure reaching the highest level in over a year and impacts of demonetisation and the GST also seem to be subsiding. As per the report the overall credit exposure has shown the highest growth in last five quarters at Rs 54.20 trillion as of March 31, 2018, with MSMEs segment constituting Rs 12.6 trillion (23%) of the commercial credit outstanding. Domestic sentiments were positive with a report showing that the government has cleared pending Goods and Service Tax (GST) refunds to the tune of Rs 38,062 crore of exporters as on June 16, 2018. Some support also came with a report highlighting that Prime Minister Narendra Modi showcased his government’s ‘unprecedented’ work in the agriculture sector, including doubling of the budget to Rs 2.12 lakh crore. Modi also reiterated that his government is working to double farm income by 2022.

However, the Nifty failed to hold the gains and turned choppy to settle in red terrain, on heavy selling along with sluggish trend in global markets. Traders got concerned with Former National Association of Software and Services Companies (NASSCOM) president R Chandrashekhar’s statement that the economy could be disrupted if job growth was not constant. He added that the government statistics showed that nearly four million jobs in the formal sector were created from September 2017 to March 2018, of which about 50% were in the service sector. The street took note of a private report stating that FII flows have seen a bumpy ride so far this year, with a meagre investment of $15 million. Meanwhile, in retaliation against the US' new global tariffs on certain steel and aluminium products, Indian government has hiked customs duty on some agricultural and steel products that are imported from the US. The import duty hike will come into effect from August 4, 2018.

All the sectoral indices ended in red on the NSE, except Financial Service. The top gainers from the F&O segment were Indian Oil Corporation, InterGlobe Aviation and Bharat Petroleum Corporation. On the other hand, the top losers were Balrampur Chini Mills, Strides Shasun and Hindustan Construction Company. In the index option segment, maximum OI continues to be seen in the 10,800-11,000 calls and 10,500-10,700 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 2.26% and reached 12.44. The 50-share Nifty was down by 30.95 points or 0.29% to settle at 10,741.10.

Nifty June 2018 futures closed at 10737.15 on Thursday, at a discount of 3.95 points over spot closing of 10741.10, while Nifty July 2018 futures ended at 10745.60, at a premium of 4.50 points over spot closing.  Nifty June futures saw an addition of 0.08 million (mn) units, taking the total outstanding open interest (OI) to 24.65 mn units. The near month derivatives contract will expire on June 28, 2018.

From the most active contracts, Tata Steel June 2018 futures traded at a premium of 2.00 points at 558.85 compared with spot closing of 556.85. The numbers of contracts traded were 23,819.

ICICI Bank June 2018 futures traded at a discount of 0.05 points at 297.90 compared with spot closing of 297.95. The numbers of contracts traded were 21,415.

Reliance Industries June 2018 futures traded at a discount of 7.35 points at 1024.25 compared with spot closing of 1031.60. The numbers of contracts traded were 19,295.

Sun TV Network June 2018 futures traded at a premium of 3.25 points at 843.20 compared with spot closing of 839.95. The numbers of contracts traded were 15,657.
Vedanta June 2018 futures traded at a premium of 0.40 points at 229.20 compared with spot closing of 228.80. The numbers of contracts traded were 14,448.

Among Nifty calls, 10800 SP from the June month expiry was the most active call with an addition of 0.69 million open interests. Among Nifty puts, 10800 SP from the June month expiry was the most active put with a contraction of 0.53 million open interests. The maximum OI outstanding for Calls was at 11000 SP (5.29 mn) and that for Puts was at 10700 SP (4.84 mn). The respective Support and Resistance levels of Nifty are: Resistance 10,791.83 ---- Pivot Point 10,758.87 --- Support --- 10708.13.

The Nifty Put Call Ratio (PCR) finally stood at 1.16 for June month contract. The top five scrips with highest PCR on OI were Cummins India (1.22), Repco Home Finance (1.17), Manappuram Finance (1.10), LIC Housing Finance (1.08) and JustDail (1.06).

Among most active underlying, Reliance Industries witnessed a contraction of 0.99 million units of Open Interest in the June month futures contract, followed by ICICI Bank witnessing a contraction of 2.70 million units of Open Interest in the June month contract, HDFC Bank witnessed a contraction of 0.68 million units of Open Interest in the June month contract, Tata Steel witnessed a contraction of 5.35 million units of Open Interest in the June month contract and State Bank of India witnessed a contraction of 2.03 million units of Open Interest in the June month future contract.