Bears take control over market; Nifty plunges over a percent

S&P Nifty continued its southward journey for the second day in a row on Monday, falling over a percent. Indian benchmark made a weak start, as traders remained concerned with a private report that business sentiments continue to decline for the country's financial and macro-economic conditions in the second quarter of the year compared to the same period a year before. As per the report, Composite Business Optimism Index stands at 78.4 during Q2 2019 as against 85.0 during Q2 2018 marking a 7.7% decline. Traders took a note of Arvind Panagariya’s statement that India must focus on growth of labour-intensive sectors to create decent jobs for the masses as well as give serious thought to privatizing the public sector banks (PSBs), emphasized that the reform process must be completed in the coming five years.

Market further extended its losses and hit fresh intraday low in late trade, as sentiment on the street weakened with a report as India has again missed the target of becoming an electricity-surplus nation by a whisker as its peak power deficit stood at 0.8 percent and the overall energy deficit remained 0.6 percent in the financial year 2019. Adding to the pessimism, a report stated that National transporter Indian Railways account for nearly three-fifths of 344 central sector projects that are facing huge cost overrun due to delay in implementation for various reasons. Investors overlooked a report that India’s growth trajectory holds immense potential for global stakeholders to establish energy, infrastructure and technology collaboration with the country.

All sectoral indices ended in red on NSE except IT. The top gainers from the F&O segment were Bharti Airtel, Wipro and Tech Mahindra. On the other hand, the top losers were Reliance Capital, PC Jeweller and Dewan Housing Finance Corporation. In the index option segment, maximum OI continues to be seen in the 11,500-11,900 calls and 10,800-11,200 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility increased by 5.78% and reached 24.05. The 50-share Nifty was down by 158.35 points 1.35% to settle at 11,594.45.

Nifty April 2019 futures closed at 11618.90 on Monday, at a premium of 24.45 points over spot closing of 11594.45, while Nifty May 2019 futures ended at 11693.30, at a premium of 98.85 points over spot closing. Nifty April futures saw a contraction of 2.07 million (mn) units, taking the total outstanding open interest (OI) to 13.73 mn units. The near month derivatives contract will expire on April 25, 2019.

From the most active contracts, Reliance Industries April 2019 futures traded at a premium of 2.70 points at 1346.70 compared with spot closing of 1344.00. The numbers of contracts traded were 50,454.

Yes Bank April 2019 futures traded at a premium of 0.40 points at 238.50 compared with spot closing of 238.10. The numbers of contracts traded were 43,139.

Indiabulls Housing Finance April 2019 futures traded at a premium of 4.75 points at 732.70 compared with spot closing of 727.95. The numbers of contracts traded were 37,135.

HDFC Bank April 2019 futures traded at a premium of 9.15 points at 2276.05 compared with spot closing of 2266.90. The numbers of contracts traded were 32,101.

Tata Motors April 2019 futures traded at a discount of 0.05 points at 235.25 compared with spot closing of 235.30. The numbers of contracts traded were 26,513.

Among Nifty calls, 11,800 SP from the April month expiry was the most active call with an addition of 0.49 million open interests. Among Nifty puts, 11,600 from the April month expiry was the most active put with a contraction of 0.24 million open interests. The maximum OI outstanding for Calls was at 11,700 SP (4.16mn) and that for Puts was at 11,000 SP (2.69mn). The respective Support and Resistance levels of Nifty are: Resistance 11,686.35 ---- Pivot Point 11,635.15 --- Support --- 11,543.25.

The Nifty Put Call Ratio (PCR) finally stood at 0.88 for April month contract. The top five scrips with highest PCR on OI were Shree Cement (3.00), Bosch (1.30), TCS (1.23) Bajaj Finserv (1.20) and Icici Prudential Life Insurance (1.09).

Among most active underlying, Reliance Industries witnessed a contraction of 5.44 million units of Open Interest in the April month futures contract, followed by HDFC Bank witnessing a contraction of 0.29 million units of Open Interest in the April month contract, Yes Bank witnessed a contraction of 6.18 million units of Open Interest in the April month contract, State Bank of India witnessed a contraction of 5.26 million units of Open Interest in the April month contract and ICICI Bank witnessed a contraction of 7.06 million units of Open Interest in the April month future contract.