Nifty extends fall for second consecutive day

Indian benchmark – Nifty extended its fall for second consecutive day and finished the day’s trade with cut of above half a percent. Market made a slightly positive start but soon entered into negative territory, as RBI in its half-yearly Financial Stability Report said that the exact duration of how long COVID-19 pandemic will last is still uncertain, therefore the downside risks to growth remain significant in FY21. Further, market extended its downside till the end of session, as traders were cautious with report that foreign portfolio investors (FPIs) remained net sellers in Indian markets in July so far on account of both domestic and global factors, including rising number of coronavirus cases and increasing tension between the US and China. Adding pessimism, a private report stated that the Indian economy is likely to face inflationary pressures in the near term, as factors like supply chain disruption and lack of low-wage workers are expected to offset the deflationary pressures from subdued demand in the economy. Traders overlooked RBI data showed the country's foreign exchange reserves surged by $1.275 billion to touch a fresh lifetime high of $517.637 billion in the week to July 17. Finally, Nifty ended the session below its crucial 11150 mark.

All of the NSE sectoral indices red in green except IT and Metal. The top gainers from the F&O segment were Jindal Steel & Power, Muthoot Finance and ICICI Prudential Life Insurance Company. On the other hand, the top losers were Mahindra & Mahindra Financial Services, Equitas Holdings and Ujjivan Financial Services. In the index option segment, maximum OI continues to be seen in the 11,300 - 11,700 calls and 10900 - 11100 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility increased by 0.52 and reached 25.05. The 50 share Nifty down by 62.35 points or 0.56% to settle at 11,131.80.

Nifty July 2020 futures closed at 11114.80 (LTP) on Monday, at a discount of 17.00 points over spot closing of 11131.80, while Nifty August 2020 futures ended at 11115.00 (LTP), at a discount of 16.80 points over spot closing. Nifty July futures saw an addition of 0.37 million (mn) units, taking the total outstanding open interest (OI) to 10.06 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 2.25 points at 2157.20 (LTP) compared with spot closing of 2154.95. The numbers of contracts traded were 87,940 (Provisional).

ICICI Bank July 2020 futures traded at a premium of 0.10 points at 358.80 (LTP) compared with spot closing of 358.70. The numbers of contracts traded were 75,157 (Provisional).

Kotak Mahindra Bank July 2020 futures traded at a discount of 6.55 points at 1315.95 (LTP) compared with spot closing of 1322.50. The numbers of contracts traded were 42,072 (Provisional).

HDFC Bank July 2020 futures traded at a premium of 1.05 points at 1081.00 (LTP) compared with spot closing of 1079.95. The numbers of contracts traded were 39,013 (Provisional).

Bajaj Finance July 2020 futures traded at a discount of 12.10 points at 3165.00 (LTP) compared with spot closing of 3177.10. The numbers of contracts traded were 38,510 (Provisional).

Among, Nifty calls, 11200 SP from the July month expiry was the most active call with an addition of 1.47 million open interests. Among Nifty puts, 11000 SP from the July month expiry was the most active put with a contraction of 0.16 million open interests. The maximum OI outstanding for Calls was at 11500 SP (4.51 mn) and that for Puts was at 11000 SP (4.21 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,208.58 -- Pivot Point 11,148.22 -- Support -- 11,071.43.

The Nifty Put Call Ratio (PCR) finally stood at (1.17) for July month contract. The top five scrips with highest PCR on Infosys (1.36), Piramal Enterprises (1.19), Mahindra & Mahindra (1.05), Wipro (1.02) and HCL Technologies (1.00).

Among most active underlying, Reliance Industries witnessed an addition of 1.88 million units of Open Interest in the July month futures contract, followed by ICICI Bank witnessing an addition of 18.94 million units of Open Interest in the July month contract, Bajaj Finance witnessed an addition of 0.86 million units of Open Interest in the July month contract, Infosys witnessed an addition of 2.37 million units of Open Interest in the July month contract and Kotak Mahindra Bank witnessed an addition of 1.18 million units of Open Interest in the July month future contract (Provisional).