Nifty ends lower for fourth straight session

Continuing its losing streak for the fourth straight session, the local equity benchmark Nifty ended Friday’s session in red terrain. After a positive start, the index remained firm for first half of the session, as optimism spread among the traders with Employment Provident Fund Organisation’s (EPFO) data report showing that India created 9.51 lakh new jobs in the month of July 2018. As per the report, total 9,51,423 new payrolls were created during July 2018 as against 8,57,934 created in the previous month, registering a growth of 10.90%. Traders took encouragement with Prime Minister Narendra Modi’s statement that the size of Indian economy would double to $5 trillion by 2022, with manufacturing and agriculture contributing $1 trillion each. However, the Nifty witnessed sharp plunge in the second half, as former Union Finance Minister P. Chidambaram blamed the government’s heavy-handed approach to the NPA problem for the sharp decline in export credit. He said despite government’s claims of taking steps to boost exports, the export credit had declined sharply to Rs 22,300 crore in June from Rs 39,000 crore in the same month in 2017.

Domestic sentiments also got hit with the EEPC India stating that at a time when the country is grappling with the widening of the current account deficit (CAD), any move to raise import duty on steel or steel products would severely hit India's crucial engineering exports and rather lead to further expansion of the CAD. But, firm cues from global markets helped the market to recover some ground in the last leg of the trade. Traders got some relief with Minister of State for Agriculture Parshottam Rupala’s statement that the farmer-producer organisation (FPO) model could help achieve the goal of doubling farmers’ income ‘well before time’. Adding some support, the Reserve Bank eased norms for companies in the manufacturing sector to raise overseas funds and allowed Indian banks to market Masala Bonds in line with the government’s measures to prop up the rupee.

All the sectoral indices ended in red on the NSE. The top gainers from the F&O segment were Just Dial, Oil India and Page Industries. On the other hand, the top losers were Dewan Housing Finance Corporation, Yes Bank and Infibeam Avenues. In the index option segment, maximum OI continues to be seen in the 11,300-11,800 calls and 10,900 -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 10.92% and reached 15.53. The 50-share Nifty was down by 91.25 points or 0.81% to settle at 11,143.10.

Nifty September 2018 futures closed at 11166.35 on Friday, at a premium of 23.25 points over spot closing of 11143.10, while Nifty October 2018 futures ended at 11207.60, at a premium of 64.50 points over spot closing.  Nifty September futures saw a contraction of 2.22 million (mn) units, taking the total outstanding open interest (OI) to 23.38 mn units. The near month derivatives contract will expire on September 27, 2018.

From the most active contracts, Yes Bank September 2018 futures traded at a premium of 2.20 points at 227.35 compared with spot closing of 225.15. The numbers of contracts traded were 1,53,088.

Dewan Housing Finance Corporation September 2018 futures traded at a premium of 13.95 points at 350.95 compared with spot closing of 337.00. The numbers of contracts traded were 92,056.

Indiabulls Housing Finance September 2018 futures traded at a discount of 2.15 points at 1058.70 compared with spot closing of 1060.85. The numbers of contracts traded were 50,239.

Tata Steel September 2018 futures traded at a premium of 2.60 points at 624.60 compared with spot closing of 622.00. The numbers of contracts traded were 49,031.

Axis Bank September 2018 futures traded at a premium of 7.35 points at 600.30 compared with spot closing of 592.95. The numbers of contracts traded were 37,786.

Among Nifty calls, 11400 SP from the September month expiry was the most active call with a contraction of 0.90 million open interests. Among Nifty puts, 11000 SP from the September month expiry was the most active put with an addition of 0.10 million open interests. The maximum OI outstanding for Calls was at 11,500 SP (3.37mn) and that for Puts was at 11,000 SP (3.84mn). The respective Support and Resistance levels of Nifty are: Resistance 11,371.12 ---- Pivot Point 11,118.78 --- Support --- 10,890.77.

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 (1.32), Godfrey Phillips India (1.23), Shree Cement (1.00), Bharat Petroleum Corporation (0.99) and Jet Airways (0.97).

Among most active underlying, Yes Bank witnessed a contraction of 2.03 million units of Open Interest in the September month futures contract, followed by Reliance Industries witnessing a contraction of 3.82 million units of Open Interest in the September month contract, Bajaj Finance witnessed a contraction of 0.80 million units of Open Interest in the September month contract, Tata Steel witnessed a contraction of 8.38 million units of Open Interest in the September month contract and State Bank of India witnessed a contraction of 7.03 million units of Open Interest in the September month future contract.