Late wave of selling drags Nifty lower

Sharp selling in last leg of trade mainly played spoil sports for domestic index and S&P CNX Nifty snapped Monday’s trade to its intraday low point, breaching its crucial 11,150 levels. Initially, market made a slightly negative start, as investors remain concerned with data showing that India’s industrial output declined by 0.1% in March, hitting a 21-month low, due to contraction in manufacturing, capital goods and consumer durables. But, selling proved short-lived as market entered in green terrain, as traders got some solace with RBI’s data showing that the country’s foreign exchange reserves increased by $171.9 million to $418.687 billion in the week to May 3, mainly on account of a rise in foreign currency assets. In the previous week, the reserves had swelled by $4.368 billion to $418.515 billion, helped by the second dollar-rupee swap auction held on April 23. Some support also came with FICCI’s survey stating that the overall sentiment in the manufacturing sector remains positive as the proportion of respondents reporting higher output growth (around 54 percent) during the January-March 2018-19 (Q4FY19) remained the same as compared to Q3 (October-December) of 2018-19.

Market once again lost its momentum and slipped into the negative terrain in noon session as traders turned cautious with private report that even as factory output fell to a 21-month low in March, the situation may not improve in the first few months of FY20 on account of the increased likelihood of lower investment activity and uncertainties around the elections. It was the last leg of trade which dragged markets to end near intraday low level, as sentiment on the street weakened with reports that reversing their three-month buying streak, foreign investors pulled out a net Rs 3,207 crore from the Indian capital markets in the first seven trading sessions of May amid the US-China trade tensions and uncertainty over the election results.

All sectoral indices ended in red on NSE except IT. The top gainers from the F&O segment were Vodafone Idea, Titan Company and Bata India. On the other hand, the top losers were IRB Infrastructure Developers, IDFC First Bank 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 increased by 3.98% and reached 27.38. The 50-share Nifty was down by 130.70 points or 1.16% to settle at 11,148.20.

Nifty May 2019 futures closed at 11181.55 on Monday, at a premium of 33.35 points over spot closing of 11148.20, while Nifty June 2019 futures ended at 11226.60, at a premium of 78.40 points over spot closing. Nifty May futures saw an addition of 0.03 million (mn) units, taking the total outstanding open interest (OI) to 16.99 mn units. The near month derivatives contract will expire on May 30, 2019.

From the most active contracts, ITC May 2019 futures traded at a discount of 3.70 points at 285.10 compared with spot closing of 288.80. The numbers of contracts traded were 37,820.

Sun Pharmaceutical Industries May 2019 futures traded at a discount of 13.80 points at 400.20 compared with spot closing of 414.00. The numbers of contracts traded were 36,677.

Yes Bank May 2019 futures traded at a discount of 0.95 points at 154.80 compared with spot closing of 155.75. The numbers of contracts traded were 36,293.

State Bank of India May 2019 futures traded at a premium of 0.20 points at 308.15 compared with spot closing of 307.95. The numbers of contracts traded were 30,371.

Reliance Industries May 2019 futures traded at a premium of 7.10 points at 1237.00 compared with spot closing of 1229.90. The numbers of contracts traded were 29,619.

Among Nifty calls, 11,300 SP from the May month expiry was the most active call with an addition of 0.08 million open interests. Among Nifty puts, 11,200 from the May month expiry was the most active put with an addition of 0.01 million open interests. The maximum OI outstanding for Calls was at 12,000 SP (2.22 mn) and that for Puts was at 11,000 SP (2.73 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,257.07 ---- Pivot Point 11,191.33 --- Support --- 11,082.47.

The Nifty Put Call Ratio (PCR) finally stood at 1.09 for May month contract. The top five scrips with highest PCR on OI were Mindtree (1.68), Bosch (1.44), NIIT Technologies (1.26), Page India (1.25) and Icici Prudential Life Insurance (1.13).

Among most active underlying, ITC witnessed an addition of 2.30 million units of Open Interest in the May month futures contract, followed by State Bank of India witnessing a contraction of 1.72 million units of Open Interest in the May month contract, Reliance Industries witnessed an addition of 0.43 million units of Open Interest in the May month contract, Housing Development Finance Corporation witnessed a contraction of 0.05 million units of Open Interest in the May month contract and Tata Steel witnessed a contraction of 1.96 million units of Open Interest in the May month future contract.