Bears make come back on street; Nifty plunges 1.48%

Bears struck back with a bang on Thursday and NSE gauge -- Nifty50 -- snapped the day’s trade with a cut of over a percentage point witnessing bloodbath even as the Reserve Bank of India (RBI) cut repo rate by 25 basis points to lowest in nine years and changed policy stance to ‘Accommodative’ from ‘Neutral’. The day began with a negative note, as sentiments remained down-beat with report that the India’s services sector activity increased at the slowest pace in a year in May, as disruptions arising from the elections in the earlier part of the month hampered growth of new work intakes. The seasonally adjusted Nikkei India Services Business Activity Index fell to 50.2 in May, from 51.0 in April, pointing to the slowest growth rate in the current 12-month stretch of expansion. The market also remained under pressure, with the India Meteorological Department’s statement that the onset of monsoon is likely to be delayed by a week and it is now expected to arrive only by June 8. The normal onset date for monsoon over Kerala is June 1 which also marks the official commencement of the four-month-long rainfall season.

Market extended losses in the afternoon deals, as sentiment on the street weakened with a report as the RBI lowered the economic growth forecast for the current fiscal to 7 per cent due to the slowdown in domestic activities and escalation in a global trade war. In the April monetary policy, the growth of Gross Domestic Product (GDP) for 2019-20 was projected at 7.2 per cent. Traders ignored World Bank’s report which forecasted that India’s economy is projected to grow at 7.5 per cent in the next three years, supported by robust investment and private consumption, in some good news to the new Indian government. Investors paid no heed to Department for Promotion of Industry and Internal Trade’s (DPIIT) report that foreign direct investment in services sector grew 36.5 per cent to $9.15 billion in 2018-19.  The sector attracted FDI worth $6.7 billion in 2017-18.

All sectoral indices ended in red on NSE. The top gainers from the F&O segment were Coal India, Berger Paints and Titan Company. On the other hand, the top losers were Dewan Housing Finance Corporation, Reliance Infrastructure and GAIL (India). In the index option segment, maximum OI continues to be seen in the 12,400-12,600 calls and 11,200-11,700 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 0.66% and reached 15.52. The 50-share Nifty was down by 177.90 points or 1.48% to settle at 11,843.75.

Nifty June 2019 futures closed at 11884.05 on Thursday, at a premium of 40.30 points over spot closing of 11843.75, while Nifty July 2019 futures ended at 11920.85, at a premium of 77.10 points over spot closing. Nifty June futures saw an addition of 0.03 million (mn) units, taking the total outstanding open interest (OI) to 1,93,05,450 mn units. The near month derivatives contract will expire on June 27, 2019.

From the most active contracts, Yes Bank June 2019 futures traded at a discount of 0.15 points at 143.70 compared with spot closing of 143.85. The numbers of contracts traded were 41,738.

Dewan Housing Finance Corporation June 2019 futures traded at a discount of 8.20 points at 86.10 compared with spot closing of 94.30. The numbers of contracts traded were 31,674.

State Bank of India June 2019 futures traded at a premium of 2.60 points at 338.90 compared with spot closing of 336.30. The numbers of contracts traded were 30,987.

Indiabulls Housing Finance June 2019 futures traded at a premium of 4.70 points at 739.60 compared with spot closing of 734.90. The numbers of contracts traded were 30,832.

IndusInd Bank June 2019 futures traded at a premium of 4.75 points at 1530.75 compared with spot closing of 1526.00. The numbers of contracts traded were 26,523.  

Among Nifty calls, 12,000 SP from the June month expiry was the most active call with an addition of 0.50 million open interests. Among Nifty puts, 12,000 from the June month expiry was the most active put with a contraction of 0.25 million open interests. The maximum OI outstanding for Calls was at 12,500 SP (2.61 mn) and that for Puts was at 11,500 SP (2.72 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,978.95 ---- Pivot Point 11,904.60 --- Support --- 11,769.40.

The Nifty Put Call Ratio (PCR) finally stood at 1.31 for June month contract. The top five scrips with highest PCR on OI were Colgate-Palmolive (2.22), Birlasoft (1.85), TCS (1.34), Bosch (1.09) and Mindtree (1.06).

Among most active underlying, State Bank of India witnessed an addition of 4.66 million units of Open Interest in the June month futures contract, followed by Reliance Industries witnessing a contraction of 0.54 million units of Open Interest in the June month contract, Axis Bank witnessed a contraction of 1.67 million units of Open Interest in the June month contract, ICICI Bank witnessed an addition of 0.31 million units of Open Interest in the June month contract and GAIL (India) witnessed an addition of 5.67 million units of Open Interest in the June month future contract.