Nifty falls into red zone

Bears struck back with a bang on Tuesday and Nifty finished sluggish trade of day below its 10650 mark. Market made a negative start after government data showed retail inflation increased to 6.09% in June, mainly on account of higher prices of food items. As per the data, food inflation in June increased to 7.87%. Market extended its downside, as a private report stating that net inflows in equities plunged 94 per cent month-on-month in June. It said increase in redemptions by 74.9 per cent month-on-month to Rs 14,200 crore led to a decline in net inflows in equities from Rs 5,600 crore in the previous month to Rs 300 crore in June, the lowest in four years. Index continued its free fall till end of the session, as  Wholesale Price Index (WPI) - based inflation stood at (-) 1.81% in June due to decline in prices of fuel and power, even as food articles remained expensive. The rate of deflation in May was 3.21%. Adding more concern with private report stated that a longer wait for a vaccine against the COVID-19 virus may lead to a contraction of up to 7.5 percent in the Indian GDP in FY21. It also revised down their base case estimates on the real GDP within a week, and now expects it to contract by 4 percent because of a drop in economic activity. Finally, Nifty ended the session with cut of over one and half percent.

All of the NSE sectoral indices ended in red except Pharma. The top gainers from the F&O segment were Biocon, Torrent Pharmaceuticals and Tata Chemicals. On the other hand, the top losers were Bharat Heavy Electricals, RBL Bank and Indiabulls Housing Finance. In the index option segment, maximum OI continues to be seen in the 11,200 - 11,700 calls and 9700 - 10300 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility increased by 5.48% and reached 26.63. The 50 share Nifty down by 195.35 points or 1.81% to settle at 10,607.35.

Nifty July 2020 futures closed at 10608.00 (LTP) on Tuesday, at a premium of 0.65 points over spot closing of 10607.35, while Nifty August 2020 futures ended at 10620.00 (LTP), at a premium of 12.65 points over spot closing. Nifty July futures saw an addition of 0.59 million (mn) units, taking the total outstanding open interest (OI) to 12.10 mn units. The near month derivatives contract will expire on July 30, 2020 (Provisional).

From the most active contracts, Reliance Industries July 2020 futures traded at a premium of 7.20 points at 1922.20 (LTP)compared with spot closing of 1915.00. The numbers of contracts traded were 75,483 (Provisional).

Bajaj Finance July 2020 futures traded at a premium of 5.20 points at 3193.95 (LTP) compared with spot closing of 3188.75. The numbers of contracts traded were 42,507 (Provisional).

Bharti Airtel July 2020 futures traded at a premium of 1.60 points at 590.00 (LTP) compared with spot closing of 588.40. The numbers of contracts traded were 41,642 (Provisional).

ICICI Bank July 2020 futures traded at a premium of 0.45 points at 346.50 (LTP) compared with spot closing of 346.05. The numbers of contracts traded were 31,311 (Provisional).

HDFC Bank July 2020 futures traded at a premium of 0.70 points at 1062.15 (LTP) compared with spot closing of 1061.45. The numbers of contracts traded were 27,914 (Provisional).

Among, Nifty calls, 11000 SP from the July month expiry was the most active call with an addition of 0.16 million open interests. Among Nifty puts, 10500 SP from the July month expiry was the most active put with an contraction of 0.096 million open interests. The maximum OI outstanding for Calls was at 11500 SP (2.62 mn) and that for Puts was at 10000 SP (3.21 mn). The respective Support and Resistance levels of Nifty are: Resistance 10,721.03 -- Pivot Point 10,641.97 -- Support -- 10,528.28.

The Nifty Put Call Ratio (PCR) finally stood at (1.46) for July month contract. The top five scrips with highest PCR on Piramal Enterprises (1.29), PVR (1.01), Ujjivan Financial Services (1.01), Bajaj Finance (0.93) and Bharat Forge (0.85).

Among most active underlying, Reliance Industries witnessed a contraction of 0.68 million units of Open Interest in the July month futures contract, followed by Bharti Airtel witnessing a contraction of 0.61 million units of Open Interest in the July month contract, Bajaj Finance witnessed a contraction of 0.52 million units of Open Interest in the July month contract, State Bank Of India witnessed a contraction of 6.20 million units of Open Interest in the July month contract and HDFC Bank witnessed a contraction of 1.58 million units of Open Interest in the July month future contract.