Late wave of selling drags Nifty lower

Domestic benchmark S&P CNX Nifty failed to hold on to its initial gains and ended in red terrain due to sell off in last leg of trade. Market settled with a cut of over half a percentage point weighed down by sharp selling in frontline counters. Initially, the Indian benchmark made a positive opening, as traders took some support with a private report that if the BJP-led National Democratic Alliance (NDA) gets a second term, it will provide liquidity support to non-banking financial companies (NBFCs) that are facing cash crunch for a year now. Some optimism also came with a report that in order to resolve outstanding trade issues by exploring mutually beneficial suitable solutions, Commerce Minister Suresh Prabhu and US Commerce Secretary Wilbur Ross have agreed to engage regularly at various level. Both sides agreed to deepen economic cooperation and bilateral trade by ensuring greater cooperation amongst stakeholders, including Government, businesses and entrepreneurs.

However, market wiped out all of its gains to enter into negative territory and settle near intraday low level, as markets remained under pressure after weak volume growth reported by consumer staple companies in Q4, FY19 underlines the slowdown seen in housing over the past five to six years and automobiles over the past year. The next government may have its task cut out to revive flagging economic growth. Traders shrugged off report that while the tax department’s e-filing website showed returns filed in 2018-19 fell to 6.68 crore from 6.74 crore in the previous fiscal, the Central Board of Direct Taxes (CBDT) in a statement clarified that the returns filed included those of previous assessment years, excluding which returns filed in 2018-19 showed an almost 19 per cent rise. But the tax department had in the past taken returns filed in a fiscal year as a composite number to show a year-on-year increase.

All sectoral indices ended in red on NSE except IT. The top gainers from the F&O segment were Strides Pharma Science, Marico and Hexaware Technologies. On the other hand, the top losers were Dewan Housing Finance Corporation, Dish TV India and Reliance Power. In the index option segment, maximum OI continues to be seen in the 11,900-12,100 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 0.17% and reached 26.47. The 50-share Nifty was down by 100.35 points or 0.87% to settle at 11,497.90.

Nifty May 2019 futures closed at 11541.90 on Tuesday, at a premium of 44.00 points over spot closing of 11497.90, while Nifty June 2019 futures ended at 11588.85, at a premium of 90.95 points over spot closing. Nifty May futures saw an addition of 0.15 million (mn) units, taking the total outstanding open interest (OI) to 18.91 mn units. The near month derivatives contract will expire on May 30, 2019.

From the most active contracts, ICICI Bank May 2019 futures traded at a premium of 2.15 points at 388.35 compared with spot closing of 386.20. The numbers of contracts traded were 63,940.

Reliance Industries May 2019 futures traded at a premium of 10.80 points at 1351.80 compared with spot closing of 1341.00. The numbers of contracts traded were 31,997.

Yes Bank May 2019 futures traded at a premium of 0.20 points at 165.25 compared with spot closing of 165.05. The numbers of contracts traded were 24,983.

Tata Motors May 2019 futures traded at a premium of 2.05 points at 192.05 compared with spot closing of 190.00. The numbers of contracts traded were 23,504.

Zee Entertainment Enterprises May 2019 futures traded at a premium of 0.70 points at 371.65 compared with spot closing of 370.95. The numbers of contracts traded were 23,107. 

Among Nifty calls, 11,700 SP from the May month expiry was the most active call with an addition of 0.009 million open interests. Among Nifty puts, 11,600 from the May month expiry was the most active put with a contraction of 0.01 million open interests. The maximum OI outstanding for Calls was at 12,000 SP (1.58 mn) and that for Puts was at 11,000 SP (2.32 mn). The respective Support and Resistance levels of Nifty are: Resistance 38,662.72 ---- Pivot Point 38,449.45 --- Support --- 38,063.36.

The Nifty Put Call Ratio (PCR) finally stood at 1.18 for May month contract. The top five scrips with highest PCR on OI were Mindtree (2.06), Just Dial (1.45), NIIT Technologies (1.26), ICICI Prudential Life Insurance (1.09) and Gujarat State Fertilizers&Chemicals (1.06).

Among most active underlying, ICICI Bank witnessed a contraction of 7.20 million units of Open Interest in the May month futures contract, followed by Reliance Industries witnessing an addition of 0.91 million units of Open Interest in the May month contract, State Bank of India witnessed a contraction of 3.47 million units of Open Interest in the May month contract, Tata Motors witnessed a contraction of 2.58 million units of Open Interest in the May month contract and Zee Entertainment Enterprises witnessed an addition of 1.37 million units of Open Interest in the May month future contract.