Nifty ends disappointing session with modest cut

It turned out to be a lackadaisical performance from the local benchmark index Nifty on Friday, as it failed to snap the session in the green territory and settled marginally below the neutral line. Sentiments remained subdued for most part of the session with the SBI’s report signifying that manufacturing growth is likely to remain flat and factory output may even continue to remain in the negative territory in the coming months. The yearly SBI Composite Index for October remained stationary at 50.2, compared to September. The report also noted that credit off-take on a year-on-year basis continues to be a laggard and stood at 10.4 per cent in September 30, 2016. Adding anxiety among the investors, Moody's report indicated that there has been a large-scale decline in private investment in PPP projects in recent years because of delays in project approvals and land purchases by the government, complicated dispute resolution mechanisms in the concession agreements and lower than expected revenues due to aggressive assumptions. Besides, weak trend in Asian stocks coupled with depreciation in rupee value against dollar also weighed on the sentiment. Indian rupee weakened by 8 paise to trade at 66.89 against the US dollar at the time of equity markets closing.

On the global front, Asian markets ended the session on weak note, while European markets exhibited mixed trend as oil extended overnight losses and the dollar stood tall on expectations of a US rate rise in the wake of disappointment from the ECB meeting. The ECB left its ultra-loose monetary policy unchanged but kept the door open to more stimulus in December, with ECB President Mario Draghi dousing recent market speculation that the central bank may begin tapering its 1.7 trillion euro asset-buying programme. Back home, after getting cautious start, the local index Nifty slipped into lower level in late morning session and continued to trade weak for most part of the session, however the market regained its momentum in the final hour of trade and finished the day with relatively small losses.

The top gainers from the F&O segment were NCC, Tata Communications and IDBI Bank. On the other hand, the top losers were Titan Company, Axis Bank and Hindalco Industries. Further, India VIX - the gauge of underlying volatility in the market - has risen in today's session, which shows that traders are buying more options contracts as insurance against declines in the market. The 9,200 Nifty October call saw unwinding of positions as its open interest fell by 3.54 lakh shares. There was writing seen in the 8,650 Put with an addition of 4.74 lakh shares in open interest. Maximum open interest remained in the 9,000 Call but shifted from the 8,500 Put to the 8,600 Put.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 2.36% and reached 13.83. The 50-share Nifty was down by 6.35 points or 0.07% to settle at 8,693.05.

Nifty October 2016 futures closed at 8700.35 on Friday at a premium of 7.30 points over spot closing of 8693.05, while Nifty November 2016 futures ended at 8742.05 at a premium of 49 points over spot closing. Nifty October futures saw contraction of 0.39 million (mn) units, taking the total outstanding open interest (OI) to 18.23 million (mn) units. The near month derivatives contract will expire on October 27, 2016.

From the most active contracts, RIL October 2016 futures traded at a premium of 3.60 points at 1067.80 compared with spot closing of 1,064.20. The numbers of contracts traded were 31,807.

ICICI Bank October 2016 futures traded at a premium of 0.60 points at 278.00 compared with spot closing of 277.40. The numbers of contracts traded were 19,302.

Axis Bank October 2016 futures traded at a premium of 1.35 points at 527.45 compared with spot closing of 526.10. The numbers of contracts traded were 14,635.

Biocon October 2016 futures traded at a premium of 1.45 points at 1009.60 compared with spot closing of 1,008.15. The numbers of contracts traded were 14,560.   

Yes Bank October 2016 futures traded at a premium of 0.20 points at 1317.60, compared with spot closing of 1,317.40. The numbers of contracts traded were 11,566.  Among Nifty calls, 8850 SP from the October month expiry was the most active call with an addition of 0.31 million open interests. Among Nifty puts, 8650 SP from the October month expiry was the most active put with an addition of 0.47 million open interests. The maximum OI outstanding for Calls was at 9000 SP (6.15 mn) and that for Puts was at 8600 SP (5.50 mn). The respective Support and Resistance levels of Nifty are: Resistance 8717.42 --- Pivot Point 8684.73 --- Support --- 8660.37.             

The Nifty Put Call Ratio (PCR) finally stood at 1.03 for October month contract. The top five scrips with highest PCR on OI were OFSS (2.00), L&T (1.46), Apollo Hospitals Enterprise (1.42), ACC (1.20) and TCS (1.05).   

Among most active underlying Reliance Industries witnessed an addition of 0.69 million of Open Interest in the October month futures contract, followed Yes Bank witnessing a contraction of 0.29 million of Open Interest in the October month contract, Biocon witnessed an addition of 0.16 million of Open Interest in the October month contract, ICICI Bank witnessed a contraction of 2.27 million of Open Interest in the October month contract and State Bank of India witnessed a contraction  of 0.80 million units of Open Interest in the October month's future contract.