Nifty plunges over a percent on Tuesday

Bears struck back on Tuesday with Nifty snapping previous session rally with a cut of around a percentage point weighed down by sharp selling in frontline counters. Initially, market made a positive start, as traders took support with IHS Markit report stating that India’s economic policy will continue to focus on maintaining strong economic growth and creating jobs for the country’s large and growing population. It added that the government will also focus on the expansion of already announced policies including infrastructure investment, the Goods and Services Tax (GST) rationalisation and financial sector regulations. Sentiment on the street also improved on the Retirement fund body, Employment Provident Fund Organisation’s (EPFO) latest ‘Provisional Estimate of Net Payroll’ data report which showed that India created 8.15 lakh new jobs in the month of March 2019. According to the data report, 9962 new jobs were created in less than 18 age group category, while 214699 jobs in 18-21 age group category.

However, markets failed to hold on to its gains and entered into negative territory to end near intraday low levels, as traders turned cautious with report that rising trade tensions have prompted the World Trade Organization (WTO) to dim its prospect for trade growth in the second quarter of the 2019 calendar year. The WTO said world trade growth is likely to remain weak into the second quarter of 2019. Traders remained anxious with a report that eminent Indian experts in the US believe that the next Indian government to be formed after the declaration of the election results on May 23 faces crucial foreign policy decisions, particularly in the economic realm.

All sectoral indices ended in red on NSE. The top gainers from the F&O segment were Jet Airways, Just Dial and Dewan Housing Finance Corporation. On the other hand, the top losers were Tata Motors, Tata Motors -- DVR and Dish TV India. 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 8.35% and reached 25.65. The 50-share Nifty was down by 119.15 points or 1.01% to settle at 11,709.10.

Nifty May 2019 futures closed at 11715.15 on Tuesday, at a premium of 6.05 points over spot closing of 11709.10, while Nifty June 2019 futures ended at 11756.50, at a premium of 47.40 points over spot closing. Nifty May futures saw a contraction of 0.41 million (mn) units, taking the total outstanding open interest (OI) to 16.68 mn units. The near month derivatives contract will expire on May 30, 2019.

From the most active contracts, Reliance Industries May 2019 futures traded at a premium of 1.05 points at 1340.95 compared with spot closing of 1339.90. The numbers of contracts traded were 50,426.

Tata Motors May 2019 futures traded at a discount of 0.70 points at 176.90 compared with spot closing of 177.60. The numbers of contracts traded were 38,197.

State Bank of India May 2019 futures traded at a premium of 1.95 points at 338.90 compared with spot closing of 336.95. The numbers of contracts traded were 27,978.

Yes Bank May 2019 futures traded at a premium of 0.20 points at 141.30 compared with spot closing of 141.10. The numbers of contracts traded were 27,713.

ICICI Bank May 2019 futures traded at a premium of 0.90 points at 401.20 compared with spot closing of 400.30. The numbers of contracts traded were 24,321.

Among Nifty calls, 12,000 SP from the May month expiry was the most active call with an addition of 0.30 million open interests. Among Nifty puts, 11,500 from the May month expiry was the most active put with an addition of 0.10 million open interests. The maximum OI outstanding for Calls was at 12,000 SP (3.61mn) and that for Puts was at 11,000 SP (3.59 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,834.17 ---- Pivot Point 11,758.48 --- Support --- 11,633.42.

The Nifty Put Call Ratio (PCR) finally stood at 0.86 for May month contract. The top five scrips with highest PCR on OI were Shree Cement (4.00), Page India (2.25), Bosch (1.74), Petronet LNG (1.49) and Mindtree (1.39).

Among most active underlying, Reliance Industries witnessed a contraction of 2.64 million units of Open Interest in the May month futures contract, followed by State Bank of India witnessing an addition of 1.67 million units of Open Interest in the May month contract, Tata Motors witnessed an addition of 1.32 million units of Open Interest in the May month contract, ICICI Bank witnessed a contraction of 0.12 million units of Open Interest in the May month contract and Bajaj Finance witnessed an addition of 0.08 million units of Open Interest in the May month future contract.