Nifty end near day’s low on late selloff

The local equity benchmark ended on a negative note, with the Nifty ending below 10,950 points. The index stared trading flat with a negative bias mirroring weak Asian cues. Traders’ sentiment remained downbeat with the commerce ministry’s data showing that India’s trade deficit widened to its highest level in more than five years in June, driven largely by a surge in oil prices and a weaker rupee. Investors were cautious on a report that the green-shoots of demand growth seen in some rural pockets is driven by farm loan waivers and not likely due to real increases in rural incomes and wages, indicative that the economy is still some time away from a full-blown rural revival. Sentiments also remained weak with Department of Industrial Policy and Promotion’s (DIPP) data showing that FDI inflows in the services sector declined by about 23% to $6.7 billion in 2017-18.

The index extended their initial losses in early noon session, reacting over a report that the green-shoots of demand growth seen in some rural pockets is driven by farm loan waivers and not likely due to real increases in rural incomes and wages, indicative that the economy is still some time away from a full-blown rural revival. Moreover, a sharp selloff in the last hour dragged equity benchmarks lower by over 80 points, on the back of higher Wholesale Price Index (WPI) data. India’s wholesale inflation grew 5.77 percent in June, a four-and-half year high, driven by some food items and fuel prices.

All the sectoral indices ended in red except IT on the NSE. The top gainers from the F&O segment were Indraprastha Gas, Tech Mahindra and MindTree. On the other hand, the top losers were PC Jeweller, DCB Bank and NCC. 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 increased by 5.48% and reached 12.97. The 50-share Nifty was down by 82.05 points or 0.74% to settle at 10,936.85.

Nifty July 2018 futures closed at 10944.25 on Monday, at a premium of 7.40 points over spot closing of 10,936.85, while Nifty August 2018 futures ended at 10959.65, at a premium of 22.80 points over spot closing. Nifty July futures saw a discount of 0.73 million (mn) units, taking the total outstanding open interest (OI) to 24.47 mn units. The near month derivatives contract will expire on July 26, 2018.

From the most active contracts, Infosys July 2018 futures traded at a premium of 1.80 points at 1337.80 compared with spot closing of 1,336.00. The numbers of contracts traded were 57,956.

Tata Steel July 2018 futures traded at a premium of 1.25 points at 520.10 compared with spot closing of 518.85. The numbers of contracts traded were 26,756.

Dr. Reddy's Laboratories July 2018 futures traded at a premium 9.85 points at 2092.85 compared with spot closing of 2,083.00. The numbers of contracts traded were 24,306.

PC Jeweller July 2018 futures traded at a premium of 0.05 points at 89.00 compared with spot closing of 88.95. The numbers of contracts traded were 22,429.

Reliance Industries July 2018 futures traded at a premium of 0.60 points at 1079.25 compared with spot closing of 1,078.65. The numbers of contracts traded were 20,015.

Among Nifty calls, 11000 SP from the July month expiry was the most active call an addition of 6.38 million open interests. Among Nifty puts, 11000 SP from the July month expiry was the most active put with a contraction of 0.44 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (3.97 mn) and that for Puts was at 10,600 SP (4.72 mn). The respective Support and Resistance levels of Nifty are: Resistance 10,995.48 ---- Pivot Point 10,960.87 --- Support --- 10,902.23.

The Nifty Put Call Ratio (PCR) finally stood at 1.38 for July month contract. The top five scrips with highest PCR on OI were Adani Power (1.29), Adani Enterprises (1.20), Reliance Industries (1.11), Oil India (1.00) and Just Dial (0.98).

Among most active underlying, Infosys witnessed a contraction of 0.61 million units of Open Interest in the July month futures contract, followed by Reliance Industries witnessing a contraction of 2.18 million units of Open Interest in the July month contract, Tata Steel witnessed a contraction of 0.48 million units of Open Interest in the July month contract, ICICI Bank India witnessed a contraction of 0.28 million units of Open Interest in the July month contract and Hindustan Unilever  witnessed an addition of 0.11 million units of Open Interest in the July month future contract.