Nifty snaps four- day losing streak

Snapping its four-day southward journey, domestic equity index -- Nifty has ended higher on account of value buying by funds and retail investors. Investors’ sentiment got boost after Skymet has raised monsoon forecast to 109% of Long period Average (LPA) vs. 105% of earlier.  However, upside remained capped  with SBI report stating that Credit growth in the country is unlikely to revive ‘materially’ in near term as demand conditions are still acting as a laggard. The yearly SBI Composite Index for May this year declined to 51.6, mainly due to lower credit growth. The monthly index, however, jumped to 50.3 in May from 46.5 in April due to increase in commercial vehicle and consumer durables sales.  Besides, caution also prevailed in the market as San Francisco Fed President John Williams said that the US central bank will likely tighten policy a bit more quickly in 2017 than this year, by perhaps one or two more rate hikes.

On the global front, Asian markets ended lower, led by Japan and China, as investors worried about the possibility of another U.S. interest rate increase as early as June. However, European markets were trading in green, as the previous session’s downbeat manufacturing data added to expectations for more stimulus by the European Central Bank and as investors awaited the release of economic sentiment reports from Germany and the entire euro zone.

Back Home, after making a flat opening, benchmark was alternating between positive and negative territory for the most part of day trade. However, buying activity which took place during in the last lag of trade that helped market to end with gain of around quarter a percent.  The top gainers from the F&O segment were Mahindra & Mahindra Financial Services, Colgate Palmolive (India) and Shriram Transport Finance Company. On the other hand, the top losers were Just Dial, Dish TV India and Unitech. In the index options segment, maximum OI was being seen in the 7700-8300 calls and 7000-7900 puts. In today's session, while the traders preferred to exit 7800 put, heavy buildup was seen in the 7650 put. On the other hand, traders exited from 8000 Call, while 7850 call witnessed considerable OI addition.       

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.37% and reached 16.22. The 50-share Nifty was down by 17.80 points or 0.23% to settle at 7,748.85.   

Nifty May 2016 futures closed at 7759.30 on Tuesday at a premium of 10.45 points over spot closing of 7,748.85, while Nifty June 2016 futures ended at 7762.10 at a premium of 13.25 points over spot closing.  Nifty May futures saw contraction of 0.95 million (mn) units, taking the total outstanding open interest (OI) to 13.66 million (mn) units. The near month derivatives contract will expire on May 26, 2016.                             

From the most active contracts, SBI May 2016 futures traded at a discount of 0.20 points at 170.00 compared with spot closing of 170.20. The number of contracts traded were 28,781.                

ICICI Bank May 2016 futures traded at a discount of 0.30 points at 224.80 compared with spot closing of 225.10. The number of contracts traded were 13,643.          

Reliance Industries May 2016 futures traded at a premium of 0.25 points at 941.25 compared with spot closing of 941.00. The number of contracts traded were 19,507.  

Axis Bank May 2016 futures traded at a discount of 0.05 points at 490.25 compared with spot closing of 490.30. The number of contracts traded were 14,381.                

HDFC Bank May 2016 futures traded at a discount of 1.40 points at 1141.00 compared with spot closing of 1,142.40. The number of contracts traded were 12,983.   

Among Nifty calls, 7800 SP from the May month expiry was the most active call with a contraction of 0.06 million open interests. Among Nifty puts, 7700 SP from the May month expiry was the most active put with an addition of 0.58 million open interests. The maximum OI outstanding for Calls was at 8000 SP (8.11 mn) and that for Puts was at 7700 SP (5.79 mn). The respective Support and Resistance levels of Nifty are: Resistance 7768.33 --- Pivot Point 7742.07 --- Support --- 7722.58.             

The Nifty Put Call Ratio (PCR) finally stood at 0.83 for May month contract. The top five scrips with highest PCR on OI were Indusind Bank (1.26), Container Corporation of India (1.22), Indiabulls Real Estate (1.21), ITC (1.21), and Axis bank (1.18).  

Among most active underlying, State Bank of India witnessed a contraction of 17.92 million of Open Interest in the May month futures contract, followed Reliance Industries witnessing a contraction of 4.69 million of Open Interest in the May month contract; Tata Steel witnessed a contraction of 3.76 million of Open Interest in the May month contract, Tata Motors witnessed a contraction of 4.49 million of Open Interest in the May month contract and Lupin witnessed a contraction of 0.99 million units of Open Interest in the May month's future contract.