Nifty continues losing streak; breaches 10,550 level

Snapping all its early gains, local equity benchmark -- Nifty -- ended last trading day of the week on a weak note. Nifty breached 10,550 level tracking weakness in global shares and uncertainty regarding the state elections outcome. Index started the day on a positive note, as traders took some support with private report stating that the Reserve Bank’s move to extend the deadline for meeting the capital conservation buffer (CCB) norms by one year would help increase lending capacity of banks by over Rs 3.5 lakh crore. The additional amount will help provide much-needed fund for micro, small and medium enterprises (MSMEs) and non-banking financial companies (NBFCs) that are facing cash crunch. Some encouragement also came with a report stating that European Union has unveiled a 'strategy paper' outlining the broad roadmap for stepping up cooperation with India in a range of key sectors, including trade, investment, Defence and security, innovation, and on dealing with various global challenges.

However, market failed to hold the gains and entered into negative trajectory in the afternoon deals, as traders turned cautious with Reserve Bank of India (RBI) revealing that the top 20 defaulters of public sector banks account for Rs 2.36 lakh crore, or 20%, of total bad loans in India, though it is yet to reveal their names. The total bad loans in the Indian banking system are Rs 10.2 lakh crore as of March 31, 2018. Market participants were also concerned with a private report stating that India could see two rate hikes in the initial monetary policies of next financial year.

All the sectoral indices ended in red on the NSE except Media. The top gainers from the F&O segment were Capital First, IDFC Bank and Zee Entertainment Enterprises. On the other hand, the top losers were Vodafone Idea, Power Finance Corporation and Page Industries. In the index option segment, maximum OI continues to be seen in the 10,600-10,800 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 decreased by 2.02% and reached 19.16. The 50-share Nifty was down by 73.30 points 0.69% to settle at 10,526.75.

Nifty November 2018 futures closed at 10524.70 on Thursday, at a discount of 2.05 points over spot closing of 10526.75, while Nifty December 2018 futures ended at 10562.75, at a premium of 36.00 points over spot closing.  Nifty November futures saw a contraction of 0.53 million (mn) units, taking the total outstanding open interest (OI) to 22.88 mn units. The near month derivatives contract will expire on November 29, 2018.

From the most active contracts, Yes Bank November 2018 futures traded at a discount of 0.25 points at 195.40 compared with spot closing of 195.65. The numbers of contracts traded were 27,882.

Reliance Industries November 2018 futures traded at a premium of 1.80 points at 1101.90 compared with spot closing of 1100.10. The numbers of contracts traded were 23,919.

Indiabulls Housing Finance November 2018 futures traded at a premium of 0.15 points at 706.55 compared with spot closing of 706.40. The numbers of contracts traded were 20,072.

Tata Steel November 2018 futures traded at a premium of 1.40 points at 540.50 compared with spot closing of 539.10. The numbers of contracts traded were 17,010.

HDFC Bank November 2018 futures traded at a discount of 1.05 points at 2005.20 compared with spot closing of 2006.25. The numbers of contracts traded were 16,488.

Among Nifty calls, 10700 SP from the November month expiry was the most active call with an addition of 0.51 million open interests. Among Nifty puts, 10,500 SP from the November month expiry was the most active put with a contraction of 0.13 million open interests. The maximum OI outstanding for Calls was at 10,700 SP (3.81mn) and that for Puts was at 10,000 SP (3.85mn). The respective Support and Resistance levels of Nifty are: Resistance 10,611.33 ---- Pivot Point 10,561.67 --- Support --- 10,477.08.

The Nifty Put Call Ratio (PCR) finally stood at 1.25 for November month contract. The top five scrips with highest PCR on OI were Adani Power (2.02), IDBI (1.86), Adani Ports and Special Economic Zone (1.60), Pidilite Industries (1.40) and UPL (1.34).

Among most active underlying, Reliance Industries witnessed a contraction of 0.52 million units of Open Interest in the November month futures contract, followed by ICICI Bank witnessing a contraction of 4.51 million units of Open Interest in the November month contract, Maruti Suzuki India witnessed a contraction of 0.06 million units of Open Interest in the November month contract, Tata Steel witnessed a contraction of 0.93 million units of Open Interest in the November month contract and State Bank of India witnessed a contraction of 1.49 million units of Open Interest in the November month future contract.