Nifty ends lackluster day with losses of over half a percent

The local equity benchmark Nifty ended Tuesday’s session lower for second straight day with the losses of over half a percent. The index made a cautious start and remained under pressure throughout the day, as traders got cautious after export credit provided by banks fell sharply by about 47% to Rs 21,900 crore as of July 20 from a year earlier. The persistent decline in export credit, especially to small players in the current year so far has raised fresh concerns about adequate financial support to exporters. Domestic sentiments also dampened with a private report highlighting that a sustained weakness in the rupee may push the Reserve Bank of India to further tighten monetary policy, perhaps as early as next month. Investors took note of NITI Aayog Vice Chairman Rajiv Kumar’s statement that the revised mechanism introduced by former RBI governor Raghuram Rajan to identify NPAs stopped banks from issuing fresh credit, resulting in slowdown of the economy in post demonetisation period.

Further, in the second half of the session, the Nifty extended losses to close near intraday low point, on the back of heavy profit booking in recent gainers by traders. The market participants were pessimistic with a private report that the Indian stock markets could tumble and the rupee may fall further ahead of the general elections if a contentious KYC circular issued by the stock market regulator is not scrapped soon. Anxiety also remained among the investors as ICRA in its latest report stated that India’s apparel exports are likely to remain subdued in the near term, even as the worst appears to be over. With the base effect setting in, ICRA expects India’s apparel exports to grow at a modest pace of 1%-2% Y-o-Y for the rest of FY2019, vis-a-vis a sharp de-growth of 14% Y-o-Y in first four months of FY2019.

All the sectoral indices ended in red on the NSE except IT. The top gainers from the F&O segment were Tech Mahindra, HCL Technologies and Tata Consultancy Services. On the other hand, the top losers were IRB Infrastructure Developers, Reliance Power and NCC. In the index option segment, maximum OI continues to be seen in the 11,700-12,000 calls and 11,400 -11,700 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 2.87% and reached 13.77. The 50-share Nifty was down by 62.05 points or 0.54% to settle at 11,520.30.

Nifty September 2018 futures closed at 11573.10 on Tuesday, at a premium of 52.80 points over spot closing of 11520.30, while Nifty October 2018 futures ended at 11611.30, at a premium of 91.00 points over spot closing. Nifty September futures saw an addition of 0.07 million (mn) units, taking the total outstanding open interest (OI) to 25.47 mn units. The near month derivatives contract will expire on September 27, 2018.

From the most active contracts, Reliance Industries September 2018 futures traded at a premium of 4.70 points at 1250.00 compared with spot closing of 1245.30. The numbers of contracts traded were 30,825.

State Bank of India September 2018 futures traded at a premium of 2.05 points at 298.30 compared with spot closing of 296.25. The numbers of contracts traded were 24,031.

Yes Bank September 2018 futures traded at a premium of 2.55 points at 336.05 compared with spot closing of 333.50. The numbers of contracts traded were 24,016.

Axis Bank September 2018 futures traded at a premium of 2.35 points at 645.10 compared with spot closing of 642.75. The numbers of contracts traded were 22,502.

Bajaj Finance September 2018 futures traded at a premium of 17.85 points at 2765.85 compared with spot closing of 2748.00. The numbers of contracts traded were 21,626.

Among Nifty calls, 11800 SP from the August month expiry was the most active call with an addition of 0.69 million open interests. Among Nifty puts, 11500 SP from the August month expiry was the most active put with an addition of 0.52 million open interests. The maximum OI outstanding for Calls was at 11,800 SP (4.16mn) and that for Puts was at 11,500 SP (3.68mn). The respective Support and Resistance levels of Nifty are: Resistance 11,582.95 ---- Pivot Point 11,539.90 --- Support --- 11,477.25.

The Nifty Put Call Ratio (PCR) finally stood at 1.18 for August month contract. The top five scrips with highest PCR on OI were Ramco Cements (2.83), Repco Home Finance (1.71), Axis Bank (1.42), Manappuram Finance (1.20) and Dewan Housing Finance Corporation (1.13).

Among most active underlying, Reliance Industries witnessed a contraction of 0.73 million units of Open Interest in the September month futures contract, followed by Adani Enterprises witnessing a contraction of 1.77 million units of Open Interest in the September month contract, Bajaj Finance witnessed an addition of 0.09 million units of Open Interest in the September month contract, State Bank of India witnessed an addition of 0.13 million units of Open Interest in the September month contract and Maruti Suzuki India witnessed a contraction of 0.02 million units of Open Interest in the September month future contract.