Nifty ends in red territory on Wednesday

Key Indian equity benchmark Nifty ended in red terrain on Wednesday, with the losses of around 0.40%. After a firm start, the index traded in green for first half of the session, supported by a report that the finance ministry on September 18 asked ministries to shortlist commodities and goods for import curbs by increasing customs duty, to ease the pressure on the rupee and keep the widening Current Account Deficit (CAD) on check. Some support also came after Finance Minister Arun Jaitley made a case for blending subsidy with investment to augment farm sector growth and make it sustainable and self-sufficient. Sentiments remained optimistic with a report stating that Indian farmers and US manufacturers of medical devices could be among the main winners in a trade package under negotiation, as the US and India look to remove long-standing irritants to ties. Traders took note of a private report that India has deferred its plan for a second time to impose retaliatory tariff worth close to $235 million on 29 American products by 45 days to November 2.

However, the market failed to hold gains in second half of the session and ended lower, impacted by a report stating that there has been a steep decline in economic confidence in India over the past year. In 2017, 83% of individuals surveyed thought the economy was doing good. But in 2018, it was down to 56%. This decline is in contrast to the trend in most countries where public confidence was similarly pronounced in 2017 and 2018. Traders also got cautious with a private report stating that the country’s rainfall deficit in the ongoing monsoon season widened to 10%, hovering on borderline drought conditions, following below-normal showers every month - a pattern of consistent shortfall not seen since 2004. Adding some concerns, India Ratings’ report stated that though the Centre may manage to achieve the debt-to-GDP ratio target of 40% by FY23, the states achieving the 20% target looks difficult as most of them have not budgeted so far.

All the sectoral indices ended in red on the NSE except Metal and IT. The top gainers from the F&O segment were Muthoot Finance, Union Bank of India and Multi Commodity Exchange of India. On the other hand, the top losers were Reliance Infrastructure, Reliance Capital and Reliance Communications. In the index option segment, maximum OI continues to be seen in the 11,300-11,800 calls and 11,000 -11,400 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 2.84% and reached 14.00. The 50-share Nifty was down by 44.55 points or 0.39% to settle at 11,234.35.

Nifty September 2018 futures closed at 11272.80 on Wednesday, at a premium of 38.45 points over spot closing of 11234.35, while Nifty October 2018 futures ended at 11316.75, at a premium of 82.40 points over spot closing. Nifty September futures saw a contraction of 0.69 million (mn) units, taking the total outstanding open interest (OI) to 25.60 mn units. The near month derivatives contract will expire on September 27, 2018.

From the most active contracts, Bank of Baroda September 2018 futures traded at a premium of 0.15 points at 116.50 compared with spot closing of 116.35. The numbers of contracts traded were 35,270.

Reliance Industries September 2018 futures traded at a premium of 2.90 points at 1215.85 compared with spot closing of 1212.95. The numbers of contracts traded were 26,853.

State Bank of India September 2018 futures traded at a premium of 1.60 points at 272.75 compared with spot closing of 271.15. The numbers of contracts traded were 22,791.

Tata Steel September 2018 futures traded at a premium of 1.30 points at 623.10 compared with spot closing of 621.80. The numbers of contracts traded were 22,649.

Yes Bank September 2018 futures traded at a premium of 1.60 points at 320.20 compared with spot closing of 318.60. The numbers of contracts traded were 20,391.

Among Nifty calls, 11400 SP from the September month expiry was the most active call with an addition of 0.68 million open interests. Among Nifty puts, 11200 SP from the September month expiry was the most active put with a contraction of 0.16 million open interests. The maximum OI outstanding for Calls was at 11,500 SP (4.17mn) and that for Puts was at 11,200 SP (3.56mn). The respective Support and Resistance levels of Nifty are: Resistance 11,307.30 ---- Pivot Point 11,259.10 --- Support --- 11,186.15.

The Nifty Put Call Ratio (PCR) finally stood at 0.87 for September month contract. The top five scrips with highest PCR on OI were Repco Home Finance (1.41), Godfrey Phillips India (1.02), Shree Cement (1.00), Jet Airways (0.99) and Bharat Petroleum Corporation (0.83).

Among most active underlying, Reliance Industries witnessed a contraction of 2.74 million units of Open Interest in the September month futures contract, followed by Maruti Suzuki India witnessing an addition of 0.04 million units of Open Interest in the September month contract, State Bank of India witnessed a contraction of 0.15 million units of Open Interest in the September month contract, Bajaj Finance witnessed a contraction of 0.59 million units of Open Interest in the September month contract and Bank of Baroda witnessed a contraction of 8.26 million units of Open Interest in the September month future contract.