Nifty edge higher; settles near 8400 mark

Indian equity benchmark -- Nifty -- ended higher on Monday as hopes grew that the upcoming Budget on February 1 would contain steps that can ease the impact of the cash ban. Some support also came with Finance ministry’s statement that demonetisation will lead to a wider tax base and lower interest rates, thus paving the way for sustainable faster economic growth. However, gains remained limited with a major central revenue body asking Finance Minister Arun Jaitley not to implement Goods and Services Tax (GST) in a hurry and threatened to take legal recourse in case their concerns are not addressed, claiming that demonetisation has affected country’s growth.

Traders were seen piling up positions in Metal, Media and PSU stocks, while selling was witnessed in Pharma and Private Banking stocks. The top gainers from the F&O segment were BEML, United Spirits and Hindalco. On the other hand, the top losers were Divi's Laboratories, JSW Energy and Amara Raja Batteries. In the index option segment, maximum OI continues to be seen in the 8100-8700 calls and 7500-8400 puts indicating this is the trading range expectation.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility increased by 0.73% and reached 15.90. The 50-share Nifty was up by 42.15 points or 0.50% to settle at 8,391.50.

Nifty January 2017 futures closed at 8402.40 on Monday at a premium of 10.90 points over spot closing of 8391.50, while Nifty February 2017 futures ended at 8424.75, at a premium of 33.25 points over spot closing. Nifty January futures saw a contraction of 2.50 million (mn) units, taking the total outstanding open interest (OI) to 15.48 million (mn) units. The near month derivatives contract will expire on January 25, 2017.

From the most active contracts, HDFC Bank January 2017 futures traded at a discount of 2.30 points at 1245.60 compared with spot closing of 1,247.90. The numbers of contracts traded were 24,853.

ICICI Bank January 2017 futures traded at a premium of 0.70 points at 258.05 compared with spot closing 257.35. The numbers of contracts traded were 19,866.

State Bank of India January 2017 futures traded flat with spot closing of 254.80. The numbers of contracts traded were 19,203.

Axis Bank January 2017 futures traded at a premium of 1.00 points at 446.00 compared with spot closing of 445.00. The numbers of contracts traded were 18,473.

HDFC Bank January 2017 futures traded at a premium of 4.05 points at 1251.95 compared with spot closing of 1,247.90. The numbers of contracts traded were 17,740.

Among Nifty calls, 8400 SP from the January month expiry was the most active call with a contraction of 0.58 million open interests. Among Nifty puts, 8400 SP from the January month expiry was the most active put with an addition of 0.39 million open interests. The maximum OI outstanding for Calls was at 8400 SP (4.90 mn) and that for Puts was at 8000 SP (6.62 mn). The respective Support and Resistance levels of Nifty are: Resistance 8421.37--- Pivot Point 8374.28--- Support --- 8344.42.

The Nifty Put Call Ratio (PCR) finally stood at 1.52 for January month contract. The top five scrips with highest PCR on OI were Pidilite Industries (2.64), Dabur India (2.38), Marico (1.94), TVS Motor (1.69) and Maruti Suzuki India (1.62).

Among most active underlying, Yes Bank witnessed a contraction of 1.39 million units of Open Interest in the January month futures contract, followed by State Bank of India witnessing a contraction of 15.11 million units  of Open Interest in the January month contract, Vedanta witnessed a contraction of 10.65 million units of Open Interest in the January month contract, Tata Steel witnessed a contraction of 3.07 million units of Open Interest in the January month future contract and ICICI Bank witnessed a contraction of 7.64 million units of Open Interest in the January month future contract.