Nifty continues southbound journey; plunges 1.20%

After witnessing bloodbath in previous session, S&P Nifty continued its southbound journey on Wednesday and settled the day’s trade with a cut of over a percentage point. It was a negative start for Nifty indices, as traders remain concerned on report that US Commerce Secretary Wilbur Ross warned any retaliatory tariff by India in response to the United States' planned withdrawal of trade privileges will not be appropriate under WTO rules. India has raised the prospect of higher import duties on more than 20 US goods if US President Donald Trump presses ahead with a plan announced in March to end the Generalized System of Preferences (GSP) for India. India is the biggest beneficiary of GSP, which allows preferential duty-free imports of up to $5.6 billion from the South Asian nation.

Markets continued their weak run in the last leg of trade to end near intraday low levels, as selling further crept in with report that direct Tax collections fell short by Rs 82,000 crore at Rs 11.18 lakh crore during 2018-19 with lower corporate tax collections emerging as one of the reasons for the lower mop. The government had set a target of Rs 12 lakh crore. Traders ignored a private report that the number of business-to-business (B2B) startups has jumped four times to 3,200 in 2018 from 800 in 2014, enabling faster growth of the ecosystem, attracting investments worth $3.7 billion from $797 million, during the period. The traders also overlooked a report that in order to facilitate private companies in India and the US, Commerce and Industry Minister Suresh Prabhu has made a case for a government-to-government agreement between both the countries.

All sectoral indices ended in red on NSE. The top gainers from the F&O segment were CG Power and Industrial Solutions, Jet Airways and MRF. On the other hand, the top losers were Zee Entertainment Enterprises, Vodafone Idea and Suzlon Energy. 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 decreased by 0.42% and reached 26.36. The 50-share Nifty was down by 138.45 points or 1.20% to settle at 11,359.45.

Nifty May 2019 futures closed at 11418.60 on Wednesday, at a premium of 59.15 points over spot closing of 11359.45, while Nifty June 2019 futures ended at 11463.55, at a premium of 104.10 points over spot closing. Nifty May futures saw an addition of 0.32 million (mn) units, taking the total outstanding open interest (OI) to 19.23 mn units. The near month derivatives contract will expire on May 30, 2019.

From the most active contracts, Zee Entertainment Enterprises May 2019 futures traded at a premium of 1.85 points at 333.90 compared with spot closing of 332.05. The numbers of contracts traded were 57,263.

Reliance Industries May 2019 futures traded at a premium of 9.65 points at 1307.40 compared with spot closing of 1297.75. The numbers of contracts traded were 51,355.

ICICI Bank May 2019 futures traded at a premium of 2.65 points at 385.05 compared with spot closing of 382.40. The numbers of contracts traded were 31,411.

Yes Bank May 2019 futures traded at a premium of 0.50 points at 161.90 compared with spot closing of 161.40. The numbers of contracts traded were 21,228.

HDFC Bank May 2019 futures traded at a premium of 7.50 points at 2316.50 compared with spot closing of 2309.00. The numbers of contracts traded were 19,429.

Among Nifty calls, 11,500 SP from the May month expiry was the most active call with an addition of 0.16 million open interests. Among Nifty puts, 11,400 from the May month expiry was the most active put with an addition of 0.12 million open interests. The maximum OI outstanding for Calls was at 12,000 SP (1.61 mn) and that for Puts was at 11,000 SP (2.47 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,443.38 ---- Pivot Point 11,395.17 --- Support --- 11,311.23.

The Nifty Put Call Ratio (PCR) finally stood at 1.17 for May month contract. The top five scrips with highest PCR on OI were Mindtree (2.13), Just Dial (1.37), NIIT Technologies (1.29), ICICI Prudential Life Insurance (1.28) and Bosch (1.25).

Among most active underlying, Reliance Industries witnessed a contraction of 0.62 million units of Open Interest in the May month futures contract, followed by Zee Entertainment Enterprises witnessing an addition of 4.20 million units of Open Interest in the May month contract, State Bank of India witnessed an addition of 0.63 million units of Open Interest in the May month contract, ICICI Bank witnessed an addition of 0.13 million units of Open Interest in the May month contract and Titan Company witnessed an addition of 0.51 million units of Open Interest in the May month future contract.