Nifty breaches 10,350 mark; downtick continues

Downtick continued in the market, as the key equity index--Nifty--ended the last trading day of the week with sharp losses of 2.67%, breaching a crucial psychological level of 10,350. The index started on the pessimistic note, as street got cautious with Union minister Nitin Gadkari’s statement that the country is facing lot of economic crisis due to crude oil imports and need to reduce imports and increase exports. Domestic sentiments also got hit as Fitch Ratings in its latest report said that the acquisitions of distressed Indian steel assets could significantly increase the leverage of the acquiring companies, which also face the risk of domestic output being displaced by a substantial increase in imports from the escalation of trade barriers. Some concerns also came with a private report that liberalising foreign borrowings for oil companies to raise to $10 billion will not have a material impact on arresting the slide of the rupee.

In the last hour of the trade, the Nifty extended its losses, after the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.5%. However, the MPC changed the stance from ‘Neutral’ to ‘Calibrated Tightening’. Anxiety remained among the traders with a private report indicating that amidst the erratic distribution of monsoon rains and with the possibilities of as many as 254 districts facing drought like situation, the total kharif cereals production likely to decline marginally by 1.71% compared to last kharif. Investors shrugged off Finance Minister Arun Jaitley’s statement that the government is determined to contain the crisis at the IL&FS at the earliest so that it does not leave any adverse impact. The street also failed to take any sense of relief with a report showing that salaries in the country are projected to increase by 10% in 2019, the highest in the Asia Pacific region.

All the sectoral indices ended in red on the NSE except IT. The top gainers from the F&O segment were PC Jeweller, Infosys and Granules India. 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 4.32% and reached 19.73. The 50-share Nifty was down by 282.80 points or 2.67% to settle at 10,316.45.

Nifty October 2018 futures closed at 10347.15 on Friday, at a premium of 30.70 points over spot closing of 10316.45, while Nifty November 2018 futures ended at 10404.15, at a premium of 87.70 points over spot closing. Nifty October futures saw an addition of 1.58 million (mn) units, taking the total outstanding open interest (OI) to 20.19 mn units. The near month derivatives contract will expire on October 25, 2018.

From the most active contracts, Hindustan Petroleum Corporation October 2018 futures traded at a premium of 0.95 points at 164.90 compared with spot closing of 163.95. The numbers of contracts traded were 49,806.

Reliance Industries October 2018 futures traded at a premium of 5.25 points at 1054.25 compared with spot closing of 1049.00. The numbers of contracts traded were 48,636.

ICICI Bank October 2018 futures traded at a premium of 2.60 points at 307.10 compared with spot closing of 304.50. The numbers of contracts traded were 31,949.

Yes Bank October 2018 futures traded at a premium of 3.25 points at 207.20 compared with spot closing of 203.95. The numbers of contracts traded were 30,290.

Bharat Petroleum Corporation October 2018 futures traded at a discount of 0.95 points at 265.30 compared with spot closing of 266.25. The numbers of contracts traded were 28,415.

Among Nifty calls, 10800 SP from the October month expiry was the most active call with an addition of 1.45 million open interests. Among Nifty puts, 10500 SP from the October month expiry was the most active put with a contraction of 0.84 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (4.50mn) and that for Puts was at 10,500 SP (3.61mn). The respective Support and Resistance levels of Nifty are: Resistance 10,484.10 ---- Pivot Point 10,373.00 --- Support --- 10,205.35.

The Nifty Put Call Ratio (PCR) finally stood at 0.84 for October month contract. The top five scrips with highest PCR on OI were Bosch (2.00), Ramco Cements (2.00), Berger Paints India (1.83), Repco Home Finance (1.56) and Cholamandalam Investment and Finance (1.44).

Among most active underlying, Reliance Industries witnessed an addition of 3.26 million units of Open Interest in the October month futures contract, followed by ICICI Bank witnessing a contraction of 8.39 million units of Open Interest in the October month contract, State Bank of India witnessed an addition of 2.35 million units of Open Interest in the October month contract, Bajaj Finance witnessed an addition of 0.45 million units of Open Interest in the October month contract and Maruti Suzuki India witnessed a contraction of 0.05 million units of Open Interest in the October month future contract.