Nifty snaps 4-day gaining streak on RBI rate hike

The local equity benchmark Nifty ended the Wednesday’s trading session on pessimistic note, snapping its four day gaining streak, as the Reserve Bank of India (RBI) increased its benchmark repo rate by 25 basis points to 6.50%. The index made an optimistic start to trade firm during early morning deals, buoyed by positive core sector data. The growth of eight core infrastructure industries surged to seven-month high of 6.7% in June 2018, as compared to 3.6% in May 2018, aided by a robust performance in cement, refinery and coal segments. The street also got some support, as India’s fiscal deficit at the end of first three months of current financial year (FY19) stood at 68.7% of the Budget Estimate (BE) for 2018-19. It improved compared to the year-ago period, when it was 80.8% of the target.

However, in noon deals, Nifty failed to hold the momentum and turned lackluster, after business activity in Indian manufacturing sector eased in the month of July 2018 as new orders and output rose at slower pace. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) fell to 52.3 in July from 53.1 in June 2018. Domestic sentiments got cautious as weather forecasting agency Skymet cut 2018 monsoon estimate to 92% of the long period average (LPA) from the earlier normal monsoon prediction, noting that as of now, the oceanic parameters are not at all favourable for enhancing monsoon rain during the second half of the season. Adding some concerns, the Minister of State for Finance Shiv Pratap Shukla said that gross bad loans in Indian banks surged to more than Rs 9.61 lakh crore by the end of 2017-18, while loans to industries formed a major chunk of such non-performing assets.

Traders were seen piling up positions in Pharma, IT and Media stocks, while selling was witnessed in Auto, PVT Bank and FIN Services. The top gainers from the F&O segment were IDBI Bank, Ashok Leyland and Piramal Enterprises. On the other hand, the top losers were Tata Global Beverages, Reliance Infrastructure and Raymond. In the index option segment, maximum OI continues to be seen in the 11,200-11,600 calls and 10,800 -11,200 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 0.40% and reached 12.53. The 50-share Nifty was down by 10.30 points or 0.09% to settle at 11,346.20.

Nifty August 2018 futures closed at 11374.30 on Wednesday, at a premium of 28.10 points over spot closing of 11346.20, while Nifty September 2018 futures ended at 11398.55, at a premium of 52.35 points over spot closing. Nifty August futures saw an addition of 0.85 million (mn) units, taking the total outstanding open interest (OI) to 25.88 mn units. The near month derivatives contract will expire on August 30, 2018.

From the most active contracts, Tata Motors August 2018 futures traded at a premium of 1.25 points at 265.65 compared with spot closing of 264.40. The numbers of contracts traded were 66,754.

Reliance Industries August 2018 futures traded at a premium of 7.35 points at 1196.05 compared with spot closing of 1188.70. The numbers of contracts traded were 26,874.

State Bank of India August 2018 futures traded at a premium of 2.10 points at 296.40 compared with spot closing of 294.30. The numbers of contracts traded were 26,125.

Ashok Leyland August 2018 futures traded at a premium of 0.60 points at 119.15 compared with spot closing of 118.55. The numbers of contracts traded were 25,992.

Maruti Suzuki India August 2018 futures traded at a discount of 38.65 points at 9288.35 compared with spot closing of 9327.00. The numbers of contracts traded were 20,417.

Among Nifty calls, 11400 SP from the August month expiry was the most active call with an addition of 0.34 million open interests. Among Nifty puts, 11300 SP from the August month expiry was the most active put with an addition of 0.33 million open interests. The maximum OI outstanding for Calls was at 11,500 SP (3.01mn) and that for Puts was at 11,000 SP (5.12mn). The respective Support and Resistance levels of Nifty are: Resistance 11,386.65 ---- Pivot Point 11,350.10 --- Support --- 11,309.65.

The Nifty Put Call Ratio (PCR) finally stood at 1.45 for August month contract. The top five scrips with highest PCR on OI were Godfrey Phillips India (2.11), Ramco Cements (1.53), Dish TV (1.50), ACC India (1.35) and Reliance Industries (1.22).

Among most active underlying, Reliance Industries witnessed a contraction of 0.03 million units of Open Interest in the August month futures contract, followed by Tata Motors witnessing an addition of 1.18 million units of Open Interest in the August month contract, Maruti Suzuki India witnessed an addition of 0.09 million units of Open Interest in the August month contract, SBI witnessed an addition of 0.23 million units of Open Interest in the August month contract and ICICI Bank witnessed a contraction of 4.50 million units of Open Interest in the August month future contract.