Nifty breaks 3-days of rally; stumbles below 10,700 mark

Breaking three days of winning streak, key equity benchmark -- Nifty -- stumbled below 10,700 mark following weak Asian clues. The barometer made a cautions start as traders took note of a report which signaled only a temporary truce, stated the Reserve Bank of India (RBI) and the government on Monday agreed to refer to an expert committee the contentious issue of appropriate size of reserves that the RBI must hold, while restructuring of stressed loans of small businesses would be considered by the central bank. Market participants remained pessimistic with Moody’s Investors Service stating that the Reserve Bank of India’s decision to allow lenders more time to adhere to additional capital buffer norms under Basel 3 is credit negative for the country’s state-run banks. Also, the decision to restructure stressed micro, small and medium enterprises (MSME) loans of up to Rs 250 million has the potential for having negative implications for the credit profiles of Indian banks.

The market continued southern journey in second half of the session, as investors’ sentiments weakened further with a report that India has slipped two places to rank 53rd on a global annual talent ranking released by IMD Business School Switzerland. The top slot has been retained by the Alpine nation itself. Sentiments were also discouraged as SEBI asked listed companies to disclose detailed reasons for delay in submission of financial results to the stock exchanges within one working day of the stipulated deadline. The traders ignored RBI’s statement that it will inject Rs 8,000 crore into the system through purchase of government securities on November 22.

All the sectoral indices ended in red on the NSE except Realty. The top gainers from the F&O segment were Page Industries, Just Dial and BEML. On the other hand, the top losers were Ujjivan Financial Services, Yes Bank and Hindalco Industries. In the index option segment, maximum OI continues to be seen in the 10,700-11,100 calls and 9800 -10,200 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility increased by 0.38% and reached 19.32. The 50-share Nifty was down by 107.20 points or 1.00% to settle at 10,656.20.

Nifty November 2018 futures closed at 10671.95 on Tuesday, at a premium of 15.75 points over spot closing of 10656.20, while Nifty December 2018 futures ended at 10709.20, at a premium of 53.00 points over spot closing. Nifty November futures saw a contraction of 0.74 million (mn) units, taking the total outstanding open interest (OI) to 24.03 mn units. The near month derivatives contract will expire on November 29, 2018.

From the most active contracts, Yes Bank November 2018 futures traded flat at 192.50 with spot closing of 192.50. The numbers of contracts traded were 48,181.

Indiabulls Housing Finance November 2018 futures traded at a premium of 2.60 points at 708.60 compared with spot closing of 706.00. The numbers of contracts traded were 28,446.

Reliance Industries November 2018 futures traded at a premium of 0.75 points at 1137.75 compared with spot closing of 1137.00. The numbers of contracts traded were 26,734.

ICICI Bank November 2018 futures traded at a premium of 1.80 points at 358.95 compared with spot closing of 357.15. The numbers of contracts traded were 19,487.

Tata Steel November 2018 futures traded at a premium of 1.00 points at 564.25 compared with spot closing of 563.25. The numbers of contracts traded were 17,241. 

Among Nifty calls, 10800 SP from the November month expiry was the most active call with an addition of 0.21 million open interests. Among Nifty puts, 10,700 SP from the November month expiry was the most active put with a contraction of 0.35 million open interests. The maximum OI outstanding for Calls was at 10,800 SP (3.61mn) and that for Puts was at 10,000 SP (4.14mn). The respective Support and Resistance levels of Nifty are: Resistance 10,717.75 ---- Pivot Point 10,679.30 --- Support --- 10,617.75.

The Nifty Put Call Ratio (PCR) finally stood at 1.49 for November month contract. The top five scrips with highest PCR on OI were Adani Power (1.88), IDBI (1.79), Jet Airways (India) (1.50), UPL (1.47) and Pidilite Industries (1.45).

Among most active underlying, Reliance Industries witnessed a contraction of 1.06 million units of Open Interest in the November month futures contract, followed by ICICI Bank witnessing a contraction of 2.27 million units of Open Interest in the November month contract, Yes Bank witnessed an addition of 1.16 million units of Open Interest in the November month contract, State Bank of India witnessed a contraction of 1.83 million units of Open Interest in the November month contract and Maruti Suzuki India witnessed an addition of 0.01 million units of Open Interest in the November month future contract.