Nifty extends gain for fourth consecutive day

The fifty stock index -- Nifty -- continued its northward journey for fourth consecutive day on Monday and ended the day above crucial psychological level of 8,800, as investors bet the central bank will cut interest rates in their policy review meet later this week on account of slowing inflation and a fiscally responsible budget. According to rating agency ICRA, the CPI inflation in ongoing quarter is expected to remain below the forecast of 5 percent. Moreover, the Union Budget for FY2018 has balanced fiscal consolidation with increased capital spending, which would revive growth in a non-inflationary manner. Some support also came with Economic Affairs Secretary Shaktikanta Das’ statement expressing confidence that the economy will grow upwards of 7 per cent next fiscal too supported sentiments. He reiterated that there will be transient impact of demonetisation on the economy, but it will not spill over to the next fiscal. The Economic Affairs Secretary taking a dig at global rating agencies for failing to upgrade India's sovereign rating despite significant improvement in macroeconomic parameters, has said the agencies are several steps behind from reality and are missing out on something which only they can best explain. On sectoral front, auto stocks gained with Union Minister Nitin Gadkari’s statement that government is keen on implementing vehicle policy that aims at scrapping 15-year old commercial vehicles in the first phase and it will send the proposal to GST Council after Cabinet nod.

Traders were seen piling up positions in Realty, Pharma and FMCG stocks, while selling was witnessed in Metal and PSU stocks. The top gainers from the F&O segment were Jubilant Foodworks, Jaiprakash Associates and Housing Development & Infrastructure. On the other hand, the top losers were Oriental Bank of Commerce, IDBI Bank and Torrent Pharmaceuticals. In the index option segment, maximum OI continues to be seen in the 8700-9200 calls and 8000-8700 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 2.05% and reached 13.39. The 50-share Nifty was up by 60.10 points or 0.69% to settle at 8,801.05.

Nifty February 2017 futures closed at 8816.60 on Monday at a premium of 15.55 points over spot closing of 8801.05, while Nifty March 2017 futures ended at 8843.60, at a premium of 42.55 points over spot closing. Nifty February futures saw an addition of 0.36 million (mn) units, taking the total outstanding open interest (OI) to 21.85 million (mn) units. The near month derivatives contract will expire on February 23, 2017.

From the most active contracts Jubilant Foodworks February 2017 futures traded at a premium of 2.80 points at 1010.25 compared with spot closing of 1,007.45. The numbers of contracts traded were 21,888.

Sun Pharmaceuticals Industries February 2017 futures traded at a premium of 3.15 points at 677.05 compared with spot closing 673.90. The numbers of contracts traded were 19,772.

ICICI Bank February 2017 futures traded at a premium of 0.15 points at 290.45 compared with spot closing of 290.30. The numbers of contracts traded were 19,333.

Aurobindo Pharma February 2017 futures traded at a premium of 2.00 points at 707.60 compared with spot closing of 705.60. The numbers of contracts traded were 17,022.

Lupin February 2017 futures traded at a premium of 10.95 points at 1502.45 compared with spot closing of 1,491.50. The numbers of contracts traded were 16,642.

Among Nifty calls, 8800 SP from the February month expiry was the most active call with a contraction of 0.51 million open interests. Among Nifty puts, 8700 SP from the February month expiry was the most active put with an addition of 0.54 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.84 mn) and that for Puts was at 8500 SP (5.46 mn). The respective Support and Resistance levels of Nifty are: Resistance 8820.03--- Pivot Point 8795.12--- Support --- 8776.13.

The Nifty Put Call Ratio (PCR) finally stood at 1.19 for February month contract. The top five scrips with highest PCR on OI were Sun TV Network (2.15), Oracle Financial Services Software (2.00), Bharti Airtel (1.34), ITC (1.19) and IDEA (1.18).

Among most active underlying, State Bank of India witnessed a contraction of 0.51 million units of Open Interest in the February month futures contract, followed by ICICI Bank witnessing a contraction of 2.49 million units  of Open Interest in the February month contract, Sun TV Network witnessed an addition of 0.95 million units of Open Interest in the February month contract, Punjab National Bank witnessed an addition of 1.54 million units of Open Interest in the February month future contract and Tata Steel witnessed an addition of 0.02 million units of Open Interest in the February month future contract.