Last hour sell-off drags Nifty lower

Last hour sell-off dragged the domestic benchmark--Nifty--lower on Tuesday’s trading session. With this, key index logged third straight day of losses. Market made a positive start, as investors took encouragement from a private report that sales of Indian junk bonds have made a big comeback in 2019, almost tripling to hit a five-year high, boosted by a risk-on rally prompted by a dovish US Federal Reserve that has given the Asia market a record start to the year. Indian companies have sold $3.7 billion in high-yield, or junk-rated, bonds so far this year, an increase of 187% from 2018. Sentiments on the street also improved as another report stated that Reserve Bank of India (RBI) is set to inject long-term liquidity worth $5 billion into the banking system through dollar-rupee buy-sell swap for a tenure of three years, the second such auction within a month. The RBI’s dollar-rupee swap auction would help absorb dollar inflows that could make the rupee stronger.

However, the market erased all of its gains in the last leg of the trade to settle in red terrain,  as investors turned anxious with the Employees State Insurance Corporation’s (ESIC) latest payroll data showing that job creation declined by 1.73% in February 2019 to 15.03 lakh as compared to 15.30 lakh in the same month last year. Some pessimism also spread among the investors with a private report stating that the India Volatility Index shot up to a three-year high of 24.05 on April 22, amid rising uncertainty over the new government formation and soaring crude oil prices. The India VIX, the fear gauge for domestic equities, rose 5.76 per cent to settle at 24.05, after an intra-day high of 24.56. Investors also remained cautious amid third phase polling and Q4 results.

Traders were seen piling up positions in Pharma, FMCG and Media, while selling was witnessed in Pharma, Media and Auto. The top gainers from the F&O segment were Suzlon Energy, Jet Airways and Reliance Capital. On the other hand, the top losers were Infibeam Avenues, Steel Authority of India and Maruti Suzuki India. In the index option segment, maximum OI continues to be seen in the 11,500-11,900 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 increased by 2.47% and reached 24.64. The 50-share Nifty was down by 18.50 points 0.16% to settle at 11,575.95.

Nifty April 2019 futures closed at 11586.40 on Tuesday, at a premium of 10.45 points over spot closing of 11575.95, while Nifty May 2019 futures ended at 11666.85, at a premium of 90.90 points over spot closing. Nifty April futures saw a contraction of 2.49 million (mn) units, taking the total outstanding open interest (OI) to 11.24 mn units. The near month derivatives contract will expire on April 25, 2019.

From the most active contracts, Yes Bank April 2019 futures traded at a premium of 1.45 points at 232.45 compared with spot closing of 231.00. The numbers of contracts traded were 53,017.

Reliance Industries April 2019 futures traded flat 1364.65 with spot closing of 1364.65. The numbers of contracts traded were 49,746.

Indiabulls Housing Finance April 2019 futures traded at a premium of 0.45 points at 744.45 compared with spot closing of 744.00. The numbers of contracts traded were 32,243.

Maruti Suzuki India April 2019 futures traded at a discount of 5.15 points at 7055.85 compared with spot closing of 7061.00. The numbers of contracts traded were 28,209.

HDFC Bank April 2019 futures traded at a premium of 5.30 points at 2252.60 compared with spot closing of 2247.30. The numbers of contracts traded were 26,852.

Among Nifty calls, 11,700 SP from the April month expiry was the most active call with an addition of 1.10 million open interests. Among Nifty puts, 11,600 from the April month expiry was the most active put with a contraction of 0.20 million open interests. The maximum OI outstanding for Calls was at 11,700 SP (5.26mn) and that for Puts was at 11,500 SP (2.78 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,626.33 ---- Pivot Point 11,595.57 --- Support --- 11,545.18.

The Nifty Put Call Ratio (PCR) finally stood at 0.84 for April month contract. The top five scrips with highest PCR on OI were Shree Cement (3.00), Bosch (1.30), TCS (1.21), Bajaj Auto (1.12) and Bajaj Finserv (1.13).

Among most active underlying, Reliance Industries witnessed a contraction of 11.19 million units of Open Interest in the April month futures contract, followed by Yes Bank witnessing a contraction of 17.86 million units of Open Interest in the April month contract, State Bank of India witnessed a contraction of 7.02 million units of Open Interest in the April month contract, ICICI Bank witnessed a contraction of 18.44 million units of Open Interest in the April month contract and Maruti Suzuki India witnessed a contraction of 0.51 million units of Open Interest in the April month future contract.