Nifty ends sharply lower; breaches 10,650 mark

Key equity benchmark --Nifty--closed the first day of the trading week sharply lower, due to selling in frontline blue chip stocks. The index continued its downtrend for seventh consecutive session. The market made a cautious start, as traders got concerned with the Federation of Indian Chambers of Commerce (FICCI) and the Indian Banks’ Association (IBA) survey stating that Liquidity is expected to remain constrained till the end of March owing to factors such as higher demand for money at the end of 2018-19, the upcoming Lok Sabha elections and advance tax outflow. Sentiments also got hit, after Former Reserve Bank of India Governor Y V Reddy termed the recent trend of rolling out doles for the farm sector, including the Union Budget's basic income scheme, as a 'disturbing trend' which will impact fiscal stability, growth and also Centre-state relations.

The market remained in red terrain in the second half of the session, as traders also got anxious with the Reserve Bank of India’s (RBI) data report showing that the country's foreign exchange reserves declined by $2.119 billion to $398.122 billion in the week to February 8, due to fall in foreign currency assets. In the previous week, the reserves had surged by $2.063 billion to $ 400.24 billion. Investors took a note of Finance Minister Arun Jaitley’s statement that India needs fewer banks and mega banks which are strong to help the needs of common man. He said economies of scale are of great help in the banking sector.

All sectoral indices ended in red on NSE except Media and Realty. The top gainers from the F&O segment were Reliance Communications, Reliance Power and Reliance Infrastructure. On the other hand, the top losers were Repco Home Finance, KPIT Technologies and IDBI Bank. 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 increased by 9.36% and reached 18.00. The 50-share Nifty was down by 83.45 points 0.78% to settle at 10,640.95.

Nifty February 2019 futures closed at 10662.25 on Monday, at a premium of 21.30 points over spot closing of 10640.95, while Nifty March 2019 futures ended at 10700.85, at a premium of 59.90 points over spot closing. Nifty February futures saw an addition of 0.65 million (mn) units, taking the total outstanding open interest (OI) to 21.89 mn units. The near month derivatives contract will expire on February 28, 2019.

From the most active contracts, Yes Bank February 2019 futures traded flat 214.00 with spot closing of 214.00. The numbers of contracts traded were 49,170.

Reliance Industries February 2019 futures traded at a premium of 8.75 points at 1224.40 compared with spot closing of 1215.65. The numbers of contracts traded were 29,741.

ITC February 2019 futures traded at a discount of 0.05 points at 274.20 compared with spot closing of 274.25. The numbers of contracts traded were 16,911.

Dr. Reddy's Laboratories February 2019 futures traded at a premium of 13.20 points at 2577.25 compared with spot closing of 2564.05. The numbers of contracts traded were 15,596.

Reliance Infrastructure February 2019 futures traded at a premium of 0.90 points at 123.60 compared with spot closing of 122.70. The numbers of contracts traded were 13,945.

Among Nifty calls, 10,700 SP from the February month expiry was the most active call with an addition of 0.60 million open interests. Among Nifty puts, 10,600 SP from the February month expiry was the most active put with a contraction of 0.25 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (4.09mn) and that for Puts was at 10,400 SP (3.21mn). The respective Support and Resistance levels of Nifty are: Resistance 10,724.43 ---- Pivot Point 10,676.42 --- Support --- 10,592.93.

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for February month contract. The top five scrips with highest PCR on OI were Shree Cements (2.50), Cipla (1.84), GMR Infrastructure (1.56), KPIT Technologies (1.50), and Wipro (1.25).

Among most active underlying, Reliance Industries witnessed an addition of 0.31 million units of Open Interest in the February month futures contract, followed by Yes Bank witnessing a contraction of 0.32 million units of Open Interest in the February month contract, Axis Bank witnessed a contraction of 0.18 million units of Open Interest in the February month contract, State Bank of India witnessed an addition of 0.23 million units of Open Interest in the February month contract and ITC witnessed an addition of 4.12 million units of Open Interest in the February month future contract.