Nifty ends lower for second straight session

The local equity benchmark Nifty ended the Monday’s session lower for second straight session, with losses of more than half a percent, amid weak cues from global markets. The index made a pessimistic start and remained in the grip of bears throughout the session, as domestic sentiments got hit with Fitch Ratings’ latest report that its outlook on the Indian banking sector is likely to remain negative until the banks address their weak core capital positions against mounting bad loans and poor financial performance. Separately, bad loans in the education sector have shown a rising trend in the past three financial years with NPAs nearing 9% of the outstanding by March 2018. The street took note of GSTN CEO’s statement that the IT backbone of the Goods and Services Tax (GST) was not given enough time to prepare a system to the satisfaction of the GSTN which led to the glitches in the implementation of the new tax regime.

The market participants failed to take any sense of relief with CII-ASCON Industry Survey report highlighting that India’s economic growth will improve further in the coming quarters due to recovery in domestic demand as also the investment cycle. The demand and investment will be supported by better consumption patterns on account of favourable monsoon, moderation in inflation and the onset of festive season. India’s firm industrial output data also failed to provide support to the market. India’s industrial production measured by Index of Industrial Production (IIP) picked up space and accelerated to 7% in the month of June 2018, on the back of strong growth in manufacturing and capital goods sector.

All the sectoral indices ended in red on the NSE except Pharma, FMCG and IT. The top gainers from the F&O segment were Apollo Hospitals Enterprise, United Breweries and Reliance Communications. On the other hand, the top losers were Sun TV Network, The India Cements and Cadila Healthcare. 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 4.28% and reached 13.40. The 50-share Nifty was down by 73.75 points or 0.65% to settle at 11,355.75.

Nifty August 2018 futures closed at 11381.15 on Monday, at a premium of 25.40 points over spot closing of 11355.75, while Nifty September 2018 futures ended at 11411.60, at a premium of 55.85 points over spot closing. Nifty August futures saw a contraction of 0.28 million (mn) units, taking the total outstanding open interest (OI) to 28.05 mn units. The near month derivatives contract will expire on August 30, 2018.

From the most active contracts, State Bank of India August 2018 futures traded at a discount of 1.65 points at 295.05 compared with spot closing of 296.70. The numbers of contracts traded were 43,136.

Tata Steel August 2018 futures traded at a premium of 0.90 points at 570.40 compared with spot closing of 569.50. The numbers of contracts traded were 21,932.

Sun TV Network August 2018 futures traded at a discount of 2.05 points at 760.35 compared with spot closing of 762.40. The numbers of contracts traded were 19,995.

Apollo Hospitals Enterprise August 2018 futures traded at a premium of 4.10 points at 1069.15 compared with spot closing of 1065.05. The numbers of contracts traded were 15,585.

ICICI Bank August 2018 futures traded at a discount of 0.95 points at 324.95 compared with spot closing of 325.90. The numbers of contracts traded were 15,291.

Among Nifty calls, 11500 SP from the August month expiry was the most active call with an addition of 0.40 million open interests. Among Nifty puts, 11300 SP from the August month expiry was the most active put with a contraction of 0.26 million open interests. The maximum OI outstanding for Calls was at 11,500 SP (4.55mn) and that for Puts was at 11,000 SP (5.04mn). The respective Support and Resistance levels of Nifty are: Resistance 11,394.60 ---- Pivot Point 11,367.45 --- Support --- 11,328.60.

The Nifty Put Call Ratio (PCR) finally stood at 1.42 for August month contract. The top five scrips with highest PCR on OI were Dish TV (1.59), Axis Bank (1.51), Adani Enterprises (1.37), Interglobe Aviation (1.31) and Godfrey Phillips India (1.23).

Among most active underlying, State Bank of India witnessed an addition of 2.44 million units of Open Interest in the August month futures contract, followed by Reliance Industries witnessing a contraction of 0.35 million units of Open Interest in the August month contract, HDFC Bank witnessed a contraction of 0.31 million units of Open Interest in the August month contract, Tata Steel witnessed a contraction of 0.11 million units of Open Interest in the August month contract and ICICI Bank witnessed a contraction of 1.18 million units of Open Interest in the August month future contract.