Nifty ends flat with positive bias; worries about banknotes remain

The fifty stock index -- Nifty -- after losing most of its early gains, ended flat with positive bias on Wednesday on concerns of slow economic growth in the near term and as worries lingered about the government's move to withdraw higher-denomination banknotes. Besides, sustained capital outflows by foreign funds coupled with depreciation in rupee value against the dollar also weighed on the sentiment. However, market participants got some confidence with the report that India's headline inflation rate based on the Consumer Price Index (combined) eased to 14 month low of 4.2% in October compared with 4.39% in September and 5% a year ago, raising hopes that the RBI (Reserve Bank of India) may cut monetary rate in its forthcoming monetary policy review next month.

Market participants were seen piling position in IT, Auto and Power stocks, while selling was witnessed in Consumer Durables, Metal and Banking sector stocks. Coming to F&O market internals, in the index options segment, maximum OI continues to be seen in the 8300-8800 calls and 7800-8100 puts indicating the expected trading range. The top gainers from the F&O segment were Bajaj Finance, Bharat Financial Inclusion and Amara Raja Batteries. On the other hand, the top losers were PC Jeweller, SRF and DLF.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility slipping by 3.19% and reached 19.50. The 50-share Nifty was up by 3.15 points or 0.04% to settle at 8,111.60.

Nifty November 2016 futures closed at 8118.55 on Wednesday at a premium of 6.95 points over spot closing of 8,111.60, while Nifty December 2016 futures ended at 8167.60 at a premium of 56 points over spot closing. Nifty November futures saw a contraction of 0.63 million (mn) units, taking the total outstanding open interest (OI) to 18.89 million (mn) units. The near month derivatives contract will expire on November 24, 2016.

From the most active contracts, ICICI Bank November 2016 futures traded at a premium of 0.65 points at 267.15 compared with spot closing of 266.50. The numbers of contracts traded were 17,900.

State Bank of India November 2016 futures traded at a discount of 0.60 points at 277.05 compared with spot closing of 277.65. The numbers of contracts traded were 20,227.

Bank of Baroda November 2016 futures traded at a discount of 0.10 points at 173.35 compared with spot closing of 173.45. The numbers of contracts traded were 13,168.

Axis Bank November 2016 futures traded at a premium of 2.15 points at 474.00 compared with spot closing of 471.85. The numbers of contracts traded were 13,652.

Tata Motors November 2016 futures traded at a discount of 0.55 points at 459.15 compared with spot closing of 459.70. The numbers of contracts traded were 15,720.     Among Nifty calls, 8300 SP from the November month expiry was the most active call with a contraction of 0.25 million open interests. Among Nifty puts, 8100 SP from the November month expiry was the most active put with an addition of 0.59 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.45 mn) and that for Puts was at 8200 SP (3.89 mn). The respective Support and Resistance levels of Nifty are: Resistance 8184.63--- Pivot Point 8137.02 --- Support --- 8063.98.             

The Nifty Put Call Ratio (PCR) finally stood at 0.67 for November month contract. The top five scrips with highest PCR on OI were JSW Steel (1), UBL (0.90), Cummins India (0.89), Oil India (0.82) and BPCL (0.81).   

Among most active underlying State Bank of India witnessed a contraction of 0.94 million of Open Interest in the November month futures contract, followed Yes Bank witnessing a contraction of 0.10 million of Open Interest in the November month contract, ICICI Bank witnessed a contraction of 1.01 million of Open Interest in the November month contract, Tata Motors witnessed a contraction of 1.07 million of Open Interest in the November month contract and Vedanta witnessed a contraction of 1.19 million units of Open Interest in the November month's future contract.