Nifty sees big sell-off day; breaches 10,600 mark

Breaching a crucial psychological level of 10,600, key Indian equity benchmark Nifty ended sharply lower on Thursday, amid a heavy selloff, weakening rupee and rising crude oil prices. After a negative opening, the index continued southward journey throughout the session, impacted by Exporters’ body Federation of Indian Export Organisations’ (FIEO) statement that the growth of country’s exports is likely to slow in the coming months owing to various domestic and global factors. It also said Indian exports have always been influenced by the growth in global trade and therefore, the subdued global trade forecast of 3.9% in 2018 and 3.7% in 2019 will have adverse bearing on export. Domestic sentiments weakened further after India’s services sector activity fell for the second straight month in September 2018. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index dropped to 50.9 in September from 51.5 in August, signaling the slowest growth in the current four-month sequence of rising activity.

The trade remained negative, with Nitin Gadkari’s statement that India is facing an economic crisis due to its huge oil imports. Adding some anxiety, a private report showed that that new investment announcements have declined in the July-September period for the second quarter in a row. As per the report, private and public sector companies together announced new projects worth Rs 1.49 trillion in the quarter which ended in September, 41% lower than the preceding quarter. The street overlooked finance ministry’s data report showing that gross direct tax collection in the first six months of the financial year grew 16.7% to Rs 5.47 lakh crore.

All the sectoral indices ended in red on the NSE. The top gainers from the F&O segment were Jet Airways (India), ICICI Bank and NHPC. On the other hand, the top losers were Hindustan Petroleum Corporation, Bharat Petroleum Corporation and Indian Oil Corporation. In the index option segment, maximum OI continues to be seen in the 10,800-11,200 calls and 10,300 -10,700 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 8.05% and reached 19.57. The 50-share Nifty was down by 259.00 points or 2.39% to settle at 10,599.25.

Nifty October 2018 futures closed at 10631.25 on Thursday, at a premium of 32.00 points over spot closing of 10599.25, while Nifty November 2018 futures ended at 10686.30, at a premium of 87.05 points over spot closing. Nifty October futures saw an addition of 1.73 million (mn) units, taking the total outstanding open interest (OI) to 18.62 mn units. The near month derivatives contract will expire on October 25, 2018.

From the most active contracts, ICICI Bank October 2018 futures traded at a premium of 1.15 points at 317.15 compared with spot closing of 316.00. The numbers of contracts traded were 49,751.

Reliance Industries October 2018 futures traded at a premium of 16.75 points at 1125.25 compared with spot closing of 1108.50. The numbers of contracts traded were 48,874.

Yes Bank October 2018 futures traded at a premium of 1.95 points at 216.25 compared with spot closing of 214.30. The numbers of contracts traded were 46,447.

Axis Bank October 2018 futures traded at a premium of 4.55 points at 588.40 compared with spot closing of 583.85. The numbers of contracts traded were 23,227.

Vedanta October 2018 futures traded at a premium of 1.45 points at 240.55 compared with spot closing of 239.10. The numbers of contracts traded were 23,104.

Among Nifty calls, 11000 SP from the October month expiry was the most active call with an addition of 1.29 million open interests. Among Nifty puts, 10500 SP from the October month expiry was the most active put with an addition of 0.68 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (3.88mn) and that for Puts was at 10,500 SP (4.44mn). The respective Support and Resistance levels of Nifty are: Resistance 10,720.22 ---- Pivot Point 10,633.73 --- Support --- 10,512.77.

The Nifty Put Call Ratio (PCR) finally stood at 1.00 for October month contract. The top five scrips with highest PCR on OI were Berger Paints India (2.41), Bosch (2.00), Ramco Cements (2.00), Repco Home Finance (1.59) and Cholamandalam Investment and Finance (1.57).

Among most active underlying, Reliance Industries witnessed an addition of 1.56 million units of Open Interest in the October month futures contract, followed by ICICI Bank witnessing a contraction of 0.69 million units of Open Interest in the October month contract, HDFC Bank witnessed a contraction of 0.56 million units of Open Interest in the October month contract, Yes Bank witnessed a contraction of 1.80 million units of Open Interest in the October month contract and Bajaj Finance witnessed an addition of 0.24 million units of Open Interest in the October month future contract.