Nifty closes above 8900 level

After trading below neutral line for most part of the day, Indian local benchmark -- Nifty -- gained momentum in last hour of trade on Tuesday and closed above the psychological 8900 level. Moreover, covering-up of short positions by speculators in view of approaching monthly expiry in the derivatives segment on Thursday contributed to the rally. Traders were also getting support with a report that yearly SBI Composite Index (year-on-year) for February 2017 improving to 49.5 compared to last month’s index of 47.0, indicating some improvement in sentiments. The monthly Index though declined marginally to 49.2 in February 2017 from 50.9 in Jan 2017 which means IIP growth may continue to contract in January and February 2017. However, gains remained limited as  traders were cautious with the India Ratings and Research’s report that infrastructure sector continued to face headwinds with some sub-segments doing better. It has maintained a negative outlook for the infrastructure sector for FY18 while providing revised outlook for a couple of sub-sectors. Shares of telecom companies declined after Reliance Jio unveiled a sharply discounted tariff plans for subscribers from April.

Traders were seen piling up positions in Financial Services, Banking and Metal stocks, while selling was witnessed only in Media stocks. The top gainers from the F&O segment were Jindal Steel & Power, Jet Airways (India) and The India Cements. On the other hand, the top losers were Jaiprakash Associates, Bharti Infratel and Bharti Airtel. In the index option segment, maximum OI continues to be seen in the 8700-9200 calls and 8200-8900 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 0.62% and reached 13.52. The 50-share Nifty was up by 28.65 points or 0.32% to settle at 8,907.85.

Nifty February 2017 futures closed at 8910.35 on Tuesday at a premium of 2.50 points over spot closing of 8907.85, while Nifty March 2017 futures ended at 8941.65, at a premium of 33.80 points over spot closing. Nifty February futures saw a contraction of 5.42 million (mn) units, taking the total outstanding open interest (OI) to 16.27 million (mn) units. The near month derivatives contract will expire on February 23, 2017.

From the most active contracts, Axis Bank February 2017 futures traded at a discount of 1.85 points at 504.90 compared with spot closing of 506.75. The numbers of contracts traded were 33,029.

Tata Consultancy Services February 2017 futures traded at a premium of 7.55 points at 2469.05 compared with spot closing of 2,461.50. The numbers of contracts traded were 23,938.

Reliance Industries February 2017 futures traded at a discount of 1.15 points at 1086.95 compared with spot closing of 1,088.10. The numbers of contracts traded were 21,494.

Bharti Airtel February 2017 futures traded at a premium of 1.95 points at 362.80 compared with spot closing of 360.85. The numbers of contracts traded were 20,690.

HDFC Bank February 2017 futures traded at a discount of 1.45 points at 1410.55 compared with spot closing of 1,412.00. The numbers of contracts traded were 19,572.

Among Nifty calls, 8900 SP from the February month expiry was the most active call with a contraction of 0.04 million open interests. Among Nifty puts, 8800 SP from the February month expiry was the most active put with a contraction of 0.48 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.41 mn) and that for Puts was at 8800 SP (5.15 mn). The respective Support and Resistance levels of Nifty are: Resistance 8932.12 --- Pivot Point 8896.53--- Support --- 8872.27.

The Nifty Put Call Ratio (PCR) finally stood at 1.51 for February month contract. The top five scrips with highest PCR on OI were Colgate-Palmolive (India) (2.89), Oracle Financial Services Software (2.00), Pidilite Industries (1.97), TVS Motor (1.63) and Eicher Motors (1.58).

Among most active underlying, Axis Bank witnessed a contraction of 5.88 million units of Open Interest in the February month futures contract, followed by Tata Consultancy Services witnessing a contraction of 1.19  million units  of Open Interest in the February month contract, Tata Steel witnessed a contraction of 5.72 million units of Open Interest in the February month contract, Reliance Industries witnessed a contraction of 2.92 million units of Open Interest in the February month future contract and State Bank of India witnessed a contraction of 17.67  million units of Open Interest in the February month future contract.