Nifty dips amid weak global cues; settles below 10,550 mark

Local equity benchmark -- Nifty -- ended Monday's trading session on a lower note, breaching 10,550 mark, following weak Asian stocks amid uncertainty around the China-US trade war, fall in rupee and unabated foreign fund outflows. The index made a pessimistic start, as traders remained cautious on a private report stating that overseas investors pulled out a massive Rs 38,900 crore (over $5 billion) from the capital markets in October, the steepest outflow in nearly two years, on rising crude oil prices, depreciating rupee and worsening current account deficit. Traders also remained concerned with former RBI governor and top economist Raghuram Rajan's statement that cross-border capital flows have been a source of financial fragility and he underscored that countries should see how best they can benefit from cross-border flows, without incurring the costs.

However, market trimmed most of the losses in last leg of trading session as traders took some solace with a monthly survey indicating that the country's services sector in October expanded at the quickest pace since July, driven by significant increase in new business orders, which in turn led to robust workforce expansion. The seasonally adjusted Nikkei India Services Business Activity Index rose to 52.2 in October, from 50.9 in September. Some comfort also came with Prime Minister Narendra Modi’s statement that he has announced measures for Micro, Small and Medium Enterprises (MSMEs) will add strength to the sector. He also stated that bigger markets and better opportunities for the MSMEs was a ‘win-win’ situation.

Traders were seen piling up positions in PSU Bank, Realty and IT stocks, while selling was witnessed in Media, Pharma and Pvt Bank. The top gainers from the F&O segment were Jet Airways (India), Infibeam Avenues and PC Jeweller. On the other hand, the top losers were Cipla, Sun TV Network and Indian Oil Corporation. In the index option segment, maximum OI continues to be seen in the 10,900-11,200 calls and 9,900 -10,200 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 6.87% and reached 19.48. The 50-share Nifty was down by 29.00 points or 0.27% to settle at 10,524.00.

Nifty November 2018 futures closed at 10550.95 on Monday, at a premium of 26.95 points over spot closing of 10524.00, while Nifty December 2018 futures ended at 10599.10, at a premium of 75.10 points over spot closing. Nifty November futures saw an addition of 0.16 million (mn) units, taking the total outstanding open interest (OI) to 23.76 mn units. The near month derivatives contract will expire on November 29, 2018.

From the most active contracts, State Bank of India November 2018 futures traded at a premium of 0.20 points at 296.30 compared with spot closing of 296.10. The numbers of contracts traded were 43,124.

Reliance Industries November 2018 futures traded at a premium of 0.75 points at 1092.75 compared with spot closing of 1092.00. The numbers of contracts traded were 34,375.

Axis Bank November 2018 futures traded at a premium of 2.25 points at 625.35 compared with spot closing of 623.10. The numbers of contracts traded were 31,805.

PC Jeweller November 2018 futures traded at a premium of 0.35 points at 94.85 compared with spot closing of 94.50. The numbers of contracts traded were 26,323.

Indiabulls Housing Finance November 2018 futures traded at a premium of 5.05 points at 838.05 compared with spot closing of 833.00. The numbers of contracts traded were 25,577.

The maximum OI outstanding for Calls was at 11,000 SP (2.58mn) and that for Puts was at 10,000 SP (4.95mn). The respective Support and Resistance levels of Nifty are: Resistance 10,562.87 ---- Pivot Point 10,519.93 --- Support --- 10,481.07.

The Nifty Put Call Ratio (PCR) finally stood at 1.54 for November month contract. The top five scrips with highest PCR on OI were Adani Power (2.35), PC Jeweller (1.42), Godrej Industries (1.40), ACC (1.37) and UPL (1.31).

Among most active underlying, State Bank of India witnessed an addition of 5.90 million units of Open Interest in the November month futures contract, followed by Reliance Industries witnessing an addition of 0.48 million units of Open Interest in the November month contract, Axis Bank witnessed a contraction of 2.03 million units of Open Interest in the November month contract, Maruti Suzuki India witnessed a contraction of 0.10 million units of Open Interest in the November month contract and Cipla witnessed a contraction of 0.14 million units of Open Interest in the November month future contract.