Nifty ends higher on RBI rate cut hopes

The fifty stock index -- Nifty -- ended higher over three and half percent on account of sustained buying by fund and retail investors amid strong global cues. Sentiment was upbeat with the government’s decision to stick to its projected fiscal consolidation path and reduce its net borrowing programme from Rs 4.8 lakh crore in FY16 to Rs 4.25 lakh crore in FY17 would give Reserve Bank of India (RBI) room to cut interest rate, which will stimulate the economy. Meanwhile, core sectors in the country once again locked themselves into a faster growth trajectory by jumping to a three-month high of 2.9% in January 2016 as compared to 0.9% in December 2015, on a back of sharp pick-up in coal, cement and electricity generation. The eight industries - crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel have a weight of 38% in the overall Index of Industrial Production (IIP) had grown at 2.3% in the same month of last year. Sentiment remained upbeat after the Union Budget provided a higher outlay for infrastructure and farming sectors. After getting gap up opening, Indian equity benchmark continued to trade with traction throughout the session and finally ended with gain of over 235 points.

On the global front, Asian markets ended higher, as oil prices rose and fresh stimulus from the Chinese central bank lifted hopes for the world's number two economy. European markets were trading higher in early deals, as data from the region's big economies bolstered the case for another strong dose of ECB stimulus next week.

The top gainers from the F&O segment were ITC, DLF and Arvind. On the other hand, the top losers were Oil India, Oil & Natural Gas Corporation and Castrol India. In the index options segment, maximum OI was being seen in the 7000-8000 calls and 6300-7200 puts. In today's session, while the traders preferred to exit 6200 put, heavy buildup was seen in the 7200 put. On the other hand, traders exited from 7100 Call, while 7200 call witnessed considerable OI addition. 

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 7.37% and reached 18.67. The 50-share Nifty was up by 235.25 points or 3.37% to settle at 7,222.30.   

Nifty March 2016 futures closed 7229.05 on Tuesday at a premium of 6.75 points over spot closing of 7,222.30, while Nifty April 2016 futures ended at 7255.20 at a premium of 32.90 points over spot closing. Nifty March futures saw addition of 0.52 million (mn) units, taking the total outstanding open interest (OI) to 18.57 million (mn) units. The near month derivatives contract will expire on March 31, 2016.                    

From the most active contracts, SBI March 2016 futures traded at a discount of 0.35 points at 162.50 compared with spot closing of 162.85. The number of contracts traded were 26,712.                      

ICICI Bank March 2016 futures traded at a discount of 0.70 points at 204.65 compared with spot closing of 205.35. The number of contracts traded were 27,839.            

Axis Bank March 2016 futures traded at a premium of 2.45 points at 394.30 compared with spot closing of 391.85. The number of contracts traded were 22,770.       

ITC March 2016 futures traded at a discount of 0.20 points at 326.15 compared with spot closing of 326.35. The number of contracts traded were 28,546.                                                

Tata Steel March 2016 futures traded at a premium of 0.95 points at 258.20 compared with spot closing of 257.25. The number of contracts traded were 13,403. 

Among Nifty calls, 7300 SP from the March month expiry was the most active call with a contraction of 0.22 million open interests. Among Nifty puts, 7000 SP from the March month expiry was the most active put with an addition of 1.13 million open interests. The maximum OI outstanding for Calls was at 7500 SP (5.28 mn) and that for Puts was at 7000 SP (6.06 mn). The respective Support and Resistance levels of Nifty are: Resistance 7293.50 --- Pivot Point 7164.30 --- Support --- 7093.10.            

The Nifty Put Call Ratio (PCR) finally stood at 0.96 for March month contract. The top five scrips with highest PCR on OI were Divis Laboratories (3.43), Indian Overseas Bank (3.36), Indo Count Industries (2.13), Granules India (2.09) and ITC (1.64).  

Among most active underlying, ITC witnessed an addition of 2.11 million of Open Interest in the March month futures contract, followed by Maruti Suzuki India  witnessing a contraction of 0.13 million of Open Interest in the March month contract; State Bank of India witnessed an addition of 0.32 million of Open Interest in the March month contract, ICICI Bank witnessed an addition of 1.78 million of Open Interest in the March month contract and Axis Bank witnessed a contraction of 1.44 million units of Open Interest in the March month's future contract.