Nifty witness bloodbath; slumps over 350 points

Bears continued to hold their control over the NSE gauge -- Nifty50 -- and snapped first day of the month below its crucial 11,700 level with a huge cut of above three percent, as Budget proposals failed to lift investors’ sentiment. Domestic market started the day on a negative note as traders remained cautious with report that the government’s fiscal deficit touched 132.4% of the full-year target at December-end mainly due to slower pace of revenue collections. The Controller General of Accounts (CGA) data showed that in actual terms, the fiscal deficit or gap between expenditure and revenue was Rs 931,725 crore. The government aims to restrict the gap at 3.3% of the GDP or Rs 703,760 crore in the year ending March 2020. However, market pared all of their initial losses and entered into green terrain, as traders took some support with report that GST collections have crossed the Rs 1 trillion mark for the third month in a row in January with improved compliance and plugging of evasion.

In afternoon trade, market again witnessed pressure and slipped into red, as sentiments dampened as government raised fiscal deficit target to 3.8 per cent of the GDP from 3.3 per cent pegged earlier for 2019-20 due to revenue shortage. In the last hour of trade, market fell sharply and touched its intraday low, as traders failed to get any sense of relief on announcements of over cut in personal income tax, extended tax benefits for affordable housing and gave relief to companies on payment of dividend.

Most of the NSE sectoral indices ended in red, except IT. The top gainers from the F&O segment Tata Consultancy Services, Divi's Laboratories and Hindustan Unilever. On the other hand, the top losers were Max Financial Services, DLF and ICICI Prudential Life Insurance Company. In the index option segment, maximum OI continues to be seen in the 12000 -12,700 calls and 11,900 - 12,350 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 3.07% and reached 16.83. The 50 share Nifty was down by 373.95 points or 3.11% to settle at 11,661.85.

Nifty February 2020 futures closed at 11632.00 (LTP) on Saturday, at a discount of 29.85 points over spot closing of 11661.85, while Nifty March 2020 futures ended at 11678.75 (LTP), at a premium of 16.90 points over spot closing. Nifty February futures saw an addition of 3.25 million (mn) units, taking the total outstanding open interest (OI) to 14.68 mn units. The near month derivatives contract will expire on February 27, 2020 (Provisional).

From the most active contracts, State Bank of India February 2020 futures traded at a premium of 1.00 points at 303.80 (LTP) compared with spot closing of 302.80. The numbers of contracts traded were 44,827 (Provisional).

Reliance Industries February 2020 futures traded at a discount of 3.00 points at 1369.00 (LTP) compared with spot closing of 1372.00. The numbers of contracts traded were 35,461 (Provisional).

ITC February 2020 futures traded at a premium of 0.65 points at 219.90 (LTP) compared with spot closing of 219.25. The numbers of contracts traded were 27,847 (Provisional).

Larsen & Toubro February 2020 futures traded at a premium of 2.40 points at 1289.00 (LTP) compared with spot closing of 1286.60. The numbers of contracts traded were 26,984 (Provisional).

ICICI Bank February 2020 futures traded at a premium of 1.75 points at 507.25 (LTP) compared with spot closing of 505.50. The numbers of contracts traded were 23,152 (Provisional).

Among, Nifty calls, 12000 SP from the February month expiry was the most active call with an addition of 0.85 million open interests. Among Nifty puts, 11800 from the February month expiry was the most active put with an addition of 0.64 units open interests. The maximum OI outstanding for Calls was at 12200 SP (2.95 mn) and that for Puts was at 12000 SP (2.70 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,908.37 -- Pivot Point 11,770.83 -- Support --11,524.32.

The Nifty Put Call Ratio (PCR) finally stood at 0.88 for February month contract. The top five scrips with highest PCR on Page Industries (2.00), Tata Consultancy Services (1.54), Tata Chemicals (1.42), Hindustan Petroleum Corporation (1.20) and Just Dial (1.05).

Among most active underlying, State Bank Of India witnessed an addition of 7.49 million units of Open Interest in the February month futures contract, followed by Reliance Industries witnessing an addition of 1.15 million units of Open Interest in the February month contract, Bajaj Finance witnessed an addition of 0.20 million units of Open Interest in the February month contract, Itc witnessed an addition of 9.30 million units of Open Interest in the February month contract and Larsen & Toubro witnessed an addition of 1.27 million units of Open Interest in the February month future contract (Provisional).