Nifty extends gain for second consecutive day

Indian equity benchmark—Nifty— continued its northward journey for second consecutive day on Tuesday and finished the day of trade with a gain of 84.30 points or 1.00% as the Supreme Court dismissed a plea seeking postponement of the budget session and global cues remained largely supportive despite mounting concerns over U.S. President Donald Trump's trade and regulatory policies and Union Budget that will be presented on February 1, 2017. Investors got some confidence with the report that the government is likely to set fiscal deficit target in the range of 3.3-3.4 percent of GDP for the financial year 2017-18 in the upcoming budget or will target a fiscal deficit of 3.5 percent of GDP -- same as that of 2016-17. Some support also came from SBI’s research report ‘Ecowrap’, which said that the government is likely to make sweeping recast of direct taxes in the ensuing budget to give a boost to the economy following demonetisation.

Traders were seen piling up positions in Metal, Pharma and Auto stocks, while selling was witnessed in Media and IT stocks. The top gainers from the F&O segment were CESC, TVS Motor and Tata Communications. On the other hand, the top losers were The Karnataka Bank, Voltas and Ajanta Pharma. In the index option segment, maximum OI continues to be seen in the 8200-8700 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 decreased by 3.89% and reached 15.28. The 50-share Nifty was up by 84.30 points or 1.00% to settle at 8,475.80.

Nifty January 2017 futures closed at 8480.50 on Tuesday at a premium of 4.70 points over spot closing of 8475.80, while Nifty February 2017 futures ended at 8509.60, at a premium of 33.80 points over spot closing. Nifty January futures saw a contraction of 4.69 million (mn) units, taking the total outstanding open interest (OI) to 10.78 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 0.70 points at 1269.10 compared with spot closing of 1269.80. The numbers of contracts traded were 44,142.

Yes Bank January 2017 futures traded at a premium of 0.05 points at 1363.90 compared with spot closing 1363.85. The numbers of contracts traded were 24,297.

Ajanta Pharma January 2017 futures traded at a premium of 10.85 points at 1757.05 compared with spot closing of 1746.20. The numbers of contracts traded were 19,144.

Reliance Industries January 2017 futures traded at a premium of 1.50 points at 1029.40 compared with spot closing of 1027.90. The numbers of contracts traded were 18,743.

ICICI Bank January 2017 futures traded at a discount of 0.05 points at 257.60 compared with spot closing of 257.65. The numbers of contracts traded were 17,659.

Among Nifty calls, 8500 SP from the January month expiry was the most active call with a contraction of 0.78 million open interests. Among Nifty puts, 8400 SP from the January month expiry was the most active put with an addition of 1.20 million open interests. The maximum OI outstanding for Calls was at 8600 SP (3.86 mn) and that for Puts was at 8000 SP (6.38 mn). The respective Support and Resistance levels of Nifty are: Resistance 8505.12--- Pivot Point 8451.63--- Support --- 8422.32.

The Nifty Put Call Ratio (PCR) finally stood at 1.89 for January month contract. The top five scrips with highest PCR on OI were Marico (5.18), Pidilite Industries (3.11), Dabur (2.86), ITC (1.78) and Maruti Suzuki India (1.71).

Among most active underlying, Yes Bank witnessed a contraction of 2.13 million units of Open Interest in the January month futures contract, followed by HDFC Bank witnessing a contraction of 7.79 million units  of Open Interest in the January month contract, Vedanta witnessed a contraction of 7.91 million units of Open Interest in the January month contract, Tata Steel witnessed a contraction of 7.42 million units of Open Interest in the January month future contract and State Bank of India witnessed a contraction of 9.73 million units of Open Interest in the January month future contract.