Nifty ends below 11,000 mark on expiry

Breaching a crucial psychological level of 11,000, the local equity benchmark Nifty ended in red terrain on Futures and Options (F&O) derivative expiry. The index made a slightly higher opening, with taking support from Finance Minister Arun Jaitley’s statement that India has large avenues of growth to sustain a gross domestic product (GDP) rise of 7-8 percent for two decades, unlike any other country in the world. Domestic sentiments were optimistic during early morning deals, as United Nations Conference on Trade and Development’s (UNCTAD) latest report forecasted that Indian economy is likely to grow 7% in calendar year 2018 as compared to 6.2% in 2017. It also added that growing demand for exports has led to a moderate recovery in industrial production. Some support also came with Federation of Indian Export Organisations (FIEO) President G K Gupta’s statement that higher tariffs coupled with the depreciating rupee will provide double protection to domestic industry and enable it to compete with imports. Besides, he added that it will give a push to Indian manufacturing as well.

But, Nifty soon gave up early gains, amid a private report stating that the Reserve Bank of India (RBI) is likely to raise interest rates in early October, despite relatively tame inflation, to prop up a retreating rupee. Traders remained pessimistic after Moody's investor service expecting US sanctions on Iran to be credit negative for Indian refiners with the estimated total decline in earnings for the Indian refiners to be about $400-$500 million. The move is also expected to increase refiners' exposure to oil price volatility. Some concerns also came with United Nations’ trade report stating that the world economy remains on a shaky ground a decade after the 2008 financial crisis as the global economic growth is spasmodic and many economies are operating below potential. The market participants overlooked reports that the RBI eased mandatory cash requirement rules for banks and assured jittery markets it would provide durable liquidity amid growing worries of a potential credit crunch in the economy.

All the sectoral indices ended in red on the NSE except IT. The top gainers from the F&O segment were Adani Enterprises, Chennai Petroleum Corporation and Bata India. On the other hand, the top losers were SREI Infrastructure Finance, Infibeam Avenues and Yes Bank. In the index option segment, maximum OI continues to be seen in the 11,300-11,700 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 decreased by 0.97% and reached 16.92. The 50-share Nifty was down by 76.25 points or 0.69% to settle at 10,977.55.

Nifty October 2018 futures closed at 11030.50 on Thursday, at a premium of 52.95 points over spot closing of 10977.55, while Nifty November 2018 futures ended at 11068.30, at a premium of 90.75 points over spot closing. Nifty October futures saw an addition of 6.23 million (mn) units, taking the total outstanding open interest (OI) to 16.50 mn units. The near month derivatives contract will expire on October 25, 2018.

From the most active contracts, Yes Bank October 2018 futures traded at a premium of 1.20 points at 204.80 compared with spot closing of 203.60. The numbers of contracts traded were 48,019.

Maruti Suzuki India October 2018 futures traded at a premium of 24.50 points at 7608.50 compared with spot closing of 7584.00. The numbers of contracts traded were 30,799.

Tata Motors October 2018 futures traded at a premium of 0.25 points at 227.10 compared with spot closing of 226.85. The numbers of contracts traded were 28,495.

Reliance Industries October 2018 futures traded at a premium of 9.85 points at 1261.90 compared with spot closing of 1252.05. The numbers of contracts traded were 21,052.

Among Nifty calls, 11100 SP from the October month expiry was the most active call with an addition of 0.62 million open interests. Among Nifty puts, 11000 SP from the October month expiry was the most active put with an addition of 0.44 million open interests. The maximum OI outstanding for Calls was at 11,500 SP (2.52mn) and that for Puts was at 11,000 SP (2.53mn). The respective Support and Resistance levels of Nifty are: Resistance 11,060.22 ---- Pivot Point 11,006.78 --- Support --- 10,924.12.

The Nifty Put Call Ratio (PCR) finally stood at 1.08 for October month contract. The top five scrips with highest PCR on OI were Berger Paints India (6.27), Torrent Power (4.27), PVR (3.29), Raymond (2.25) and SRF (2.18).

Among most active underlying, Reliance Industries witnessed an addition of 8.94 million units of Open Interest in the October month futures contract, followed by Yes Bank witnessing an addition of 25.43 million units of Open Interest in the October month contract, Maruti Suzuki India witnessed an addition of 1.14 million units of Open Interest in the October month contract, State Bank of India witnessed an addition of 25.17 million units of Open Interest in the October month contract and HDFC Bank witnessed an addition of 4.60 million units of Open Interest in the October month future contract.