Nifty snaps 5-day gaining streak

The local equity benchmark Nifty ended last trading day of the week slightly lower, snapping its five-days gaining streak.  The index made optimistic start, supported by Finance Minister Arun Jaitley’s statement that India could soon emerge as the world’s fifth largest economy if it continues to maintain its current pace of growth. Some support also came after the government has set up a high-level task force under the chairmanship of Cabinet Secretary P K Sinha, in order to identify various items and policy interventions to curb import dependence. However, Nifty soon turned volatile, on account of weak microeconomic data of CPI inflation and factory output. India’s retail inflation surged to five-month high of 5% in June 2018, for the third straight month, as compared to 4.87% in May, while India’s industrial production measured by Index of Industrial Production (IIP) declined to a seven-month low of 3.2% in the month of May 2018, as compared to a revised 4.8% growth in April.

Domestic sentiments got pessimistic with Reserve Bank of India’s report stating that loan waivers have reduced burden on the farmers but there may be no visible benefits to the overall economy. Adding to the woes, Organisation for Economic Cooperation and Development (OECD) said that big emerging economies like China and India will suffer more than developed countries if trade tariffs return to 1990 levels. Traders also got cautious with a report stating that the UK government's latest blueprint for Brexit released July 12 threatens to derail plans for closer trade ties with India as it would prevent Britain from making the kind of concessions on trade in goods. Besides, investors took note of Niti Aayog vice chairman Rajiv Kumar’s statement that emergence of India as the sixth largest economy was very much expected but still there is a long way to go as the per capita income of the country is still low.

All the sectoral indices ended in green except IT on the NSE. The top gainers from the F&O segment were Adani Enterprises, Titan Company and Shriram Transport Finance Company. On the other hand, the top losers were PVR, NCC and Karnataka Bank. In the index option segment, maximum OI continues to be seen in the 10,800-11,100 calls and 10,400-10,800 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 1.62% and reached 12.30. The 50-share Nifty was down by 4.30 points or 0.04% to settle at 11,018.90.

Nifty July 2018 futures closed at 11020.00 on Friday, at a premium of 1.10 points over spot closing of 11018.90, while Nifty August 2018 futures ended at 11037.00, at a premium of 18.10 points over spot closing. Nifty July futures saw an addition of 0.04 million (mn) units, taking the total outstanding open interest (OI) to 25.20 mn units. The near month derivatives contract will expire on July 26, 2018.

From the most active contracts, Reliance Industries July 2018 futures traded at a discount of 6.15 points at 1094.85 compared with spot closing of 1101.00. The numbers of contracts traded were 36,427.

Infosys July 2018 futures traded at a premium of 0.30 points at 1323.30 compared with spot closing of 1323.00. The numbers of contracts traded were 34,927.

Jindal Steel & Power July 2018 futures traded at a premium 0.05 points at 207.05 compared with spot closing of 207.00. The numbers of contracts traded were 20,740.

PVR July 2018 futures traded at a discount of 2.80 points at 1216.00 compared with spot closing of 1218.80. The numbers of contracts traded were 17,738.

Yes Bank July 2018 futures traded at a premium of 0.65 points at 377.55 compared with spot closing of 376.90. The numbers of contracts traded were 16,279.

Among Nifty calls, 11000 SP from the July month expiry was the most active call a contraction of 0.50 million open interests. Among Nifty puts, 11000 SP from the July month expiry was the most active put with an addition of 0.70 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (3.32 mn) and that for Puts was at 10,600 SP (5.03 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,060.25 ---- Pivot Point 11,030.00 --- Support --- 10,988.65.

The Nifty Put Call Ratio (PCR) finally stood at 1.58 for July month contract. The top five scrips with highest PCR on OI were Adani Enterprises (1.54), Adani Power (1.40), Reliance Industries (1.22), Just Dial (1.13) and Oil India (1.04).

Among most active underlying, Reliance Industries witnessed an addition of 0.67 million units of Open Interest in the July month futures contract, followed by Infosys witnessing a contraction of 2.20 million units of Open Interest in the July month contract, Tata Consultancy Services witnessed an addition of 0.12 million units of Open Interest in the July month contract, Maruti Suzuki India witnessed an addition of 0.04 million units of Open Interest in the July month contract and HDFC Bank witnessed a contraction of 0.70 million units of Open Interest in the July month future contract.