Nifty sheds in late sell-off; cracks 10,800 mark

Key equity benchmark -- Nifty -- wiped-off early gains to end Wednesday’s session in a topsy-turvy trade. Barometer succumbed to the final-hour selling pressure by extending its fall for the fourth consecutive session. Market made a positive start as domestic sentiment was buoyed on Central Statistics Office’s (CSO) report which showed that India's Consumer Price Index (CPI)-based inflation for the month of January 2019 eased to a 19-month low at 2.05% over the previous month on continued decline in food prices, including vegetables and eggs, while industrial production in December 2018 bounced back to 2.4% after sliding to a 17-month low in November. Domestic sentiments remained upbeat with a report that outstanding indirect tax payable rose by over 37% between FY16 and FY19 (up to December) but the recoverable direct tax payable went up by over 47% during the same period.

Market kept healthy momentum in the second half of the trading session, as traders remain energized with Finance Minister Piyush Goyal’s statement that now individuals earning up to Rs 9.5 lakh can escape liability by taking advantage of saving schemes. The Minister said he did not propose any change in the tax rate but only provided few rebates which will boost spending and help the economy. Domestic sentiment was buoyed on report that Cabinet is expected to soon consider a proposal of FDI-linked relaxation for mandatory 30 per cent local sourcing norms for foreign single brand retailers by allowing them more time to comply with regulations. However, barometer failed to sustain early gains and slipped into negative trajectory in last hour of the trade as investors turned cautious after the Comptroller and Auditor General (CAG) pointed out irregularities in the way part of goods and services tax (GST) revenue was transferred to states in 2017-18. It said the devolution of Integrated GST (IGST), which is collected on the inter-state supply of goods and services and imports, to states did not happen according to provisions of the law.

All sectoral indices ended in red on NSE except IT and Realty. The top gainers from the F&O segment were Indian Bank, Adani Power and Allahabad Bank. On the other hand, the top losers were CG Power and Industrial Solutions, National Aluminium Company and Jain Irrigation Systems. In the index option segment, maximum OI continues to be seen in the 10,800-11,200 calls and 10,200 -10,600 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 0.13% and reached 15.73. The 50-share Nifty was down by 37.75 points 0.35% to settle at 10,793.65.

Nifty February 2019 futures closed at 10823.40 on Wednesday, at a premium of 29.75 points over spot closing of 10793.65, while Nifty March 2019 futures ended at 10857.25, at a premium of 63.60 points over spot closing. Nifty February futures saw an addition of 0.51 million (mn) units, taking the total outstanding open interest (OI) to 22.24 mn units. The near month derivatives contract will expire on February 28, 2019.

From the most active contracts, Sun Pharmaceutical Industries February 2019 futures traded at a premium of 3.90 points at 432.60 compared with spot closing of 428.70. The numbers of contracts traded were 40,729.

Reliance Industries February 2019 futures traded at a premium of 12.70 points at 1251.00 compared with spot closing of 1238.30. The numbers of contracts traded were 28,274.

Bata India February 2019 futures traded at a discount of 10.80 points at 1263.20 compared with spot closing of 1274.00. The numbers of contracts traded were 25,568.

Zee Entertainment Enterprises February 2019 futures traded at a discount of 0.55 points at 409.45 compared with spot closing of 410.00. The numbers of contracts traded were 19,844.

Axis Bank February 2019 futures traded at a premium of 0.90 points at 700.25 compared with spot closing of 699.35. The numbers of contracts traded were 19,776.

Among Nifty calls, 10,900 SP from the February month expiry was the most active call with an addition of 0.45 million open interests. Among Nifty puts, 10,800 SP from the February month expiry was the most active put with a contraction of 0.05 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (3.90mn) and that for Puts was at 10,400 SP (3.17mn). The respective Support and Resistance levels of Nifty are: Resistance 10,866.17 ---- Pivot Point 10,819.13 --- Support --- 10,746.62

The Nifty Put Call Ratio (PCR) finally stood at 1.18 for February month contract. The top five scrips with highest PCR on OI were Shree Cements (2.50), TCS (1.99), Cipla (1.81), GMR Infrastructure (1.40) and Nestle India (1.34).

Among most active underlying, Reliance Industries witnessed an addition of 0.89 million units of Open Interest in the February month futures contract, followed by Sun Pharmaceutical Industries witnessing a contraction of 1.71 million units of Open Interest in the February month contract, State Bank of India witnessed an addition of 0.30 million units of Open Interest in the February month contract, Axis Bank witnessed a contraction of 3.47 million units of Open Interest in the February month contract and Bata India witnessed an addition of 0.59 million units of Open Interest in the February month future contract.