Late sell-off drags Nifty lower on Thursday

Sentiments turned bearish in the final hour of trade and Nifty closed the session tad below its psychological support levels of 11,600 mark. The domestic benchmark made a cautions start, as traders reacted negatively to a private report that Indian businesses are getting squeezed. As economic growth slows and inflation sinks they have little ability to raise prices without losing sales, and yet they are getting almost no relief from borrowing costs with lending rates remaining high. Investors were also on the back foot with another private report that India’s June-September monsoon, which delivers more than 70% of the country’s annual rainfall, is likely to be below normal this year as the El Nino weather pattern may impact rain. Market turned positive in afternoon deals the Reserve Bank of India’s (RBI) monetary policy committee (MPC), led by Governor Shaktikanta Das, decided to cut repo rate by 25 basis points (bps) to 6.0% in its First Bi-monthly Monetary Policy Statement, 2019-20, to bring interest rate to the lowest level in one year on softening inflation.

But, the recovery proved short lived and market once again entered into negative terrain as investors turned anxious with data showing that the country's services sector activity eased in March with slowest pace of output growth in six-months due to a slower expansion in new work, leading to weakest rate of hiring since last September. The seasonally adjusted Nikkei India Services Business Activity Index fell to 52 in March from 52.5 in February, indicating the slowest expansion since last September. Some pessimism also spread among the investors after Reserve Bank Governor Shaktikanta Das said that even though the headline credit demand is growing at a healthy 14 percent, it is not broadbased while those to MSMEs have been muted so far. Das further said the RBI will continue to watch macroeconomic factors and will act timely on the same.

Traders were seen piling up positions in Media, Pharma and Auto stocks, while selling was witnessed in IT, PVT Bank and Bank. The top gainers from the F&O segment were Strides Pharma Science, InterGlobe Aviation and SRF. On the other hand, the top losers were Repco Home Finance, NCC and Vodafone Idea. In the index option segment, maximum OI continues to be seen in the 11,800-12,200 calls and 11,300-11,700 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 0.71% and reached 18.65. The 50-share Nifty was down by 45.95 points 0.39% to settle at 11,598.00.

Nifty April 2019 futures closed at 11679.55 on Thursday, at a premium of 81.55 points over spot closing of 11598.00, while Nifty May 2019 futures ended at 11747.10, at a premium of 149.10 points over spot closing. Nifty April futures saw a contraction of 0.14 million (mn) units, taking the total outstanding open interest (OI) to 15.48 mn units. The near month derivatives contract will expire on April 25, 2019.

From the most active contracts, Indiabulls Housing Finance April 2019 futures traded at a premium of 7.95 points at 906.45 compared with spot closing of 898.50. The numbers of contracts traded were 40,561.

Reliance Industries April 2019 futures traded at a premium of 8.55 points at 1363.05 compared with spot closing of 1354.50. The numbers of contracts traded were 27,171.

Yes Bank April 2019 futures traded at a premium of 1.90 points at 270.20 compared with spot closing of 268.30. The numbers of contracts traded were 26,924.

Zee Entertainment Enterprises April 2019 futures traded at a premium of 2.05 points at 419.85 compared with spot closing of 417.80. The numbers of contracts traded were 24,177.

State Bank of India April 2019 futures traded at a premium of 1.90 points at 324.20 compared with spot closing of 322.30. The numbers of contracts traded were 22,386.

Among Nifty calls, 11,700 SP from the April month expiry was the most active call with an addition of 0.20 million open interests. Among Nifty puts, 11,600 from the April month expiry was the most active put with an addition of 0.30 million open interests. The maximum OI outstanding for Calls was at 12,000 SP (2.45mn) and that for Puts was at 11,500 SP (2.56mn). The respective Support and Resistance levels of Nifty are: Resistance 11,653.97 ---- Pivot Point 11,606.58 --- Support --- 11,550.62.

The Nifty Put Call Ratio (PCR) finally stood at 1.19 for April month contract. The top five scrips with highest PCR on OI were Bosch (1.47), Adani Power (1.31), Mindtree (1.16), Infosys (1.16) and Icici Prudential Life Insurance (1.01).

Among most active underlying, Reliance Industries witnessed an addition of 0.66 million units of Open Interest in the April month futures contract, followed by State Bank of India witnessing an addition of 0.39 million units of Open Interest in the April month contract, Indiabulls Housing Finance witnessed a contraction of 0.77 million units of Open Interest in the April month contract, ICICI Bank witnessed an addition of 1.24 million units of Open Interest in the April month contract and HDFC witnessed a contraction of 0.91 million units of Open Interest in the April month future contract.