Nifty witnesses decent pullback; regains 8,900 level

Better than expected macro-economic data coupled with firm global cues supported Indian equity benchmark -- Nifty --to end above 8,900 mark on Wednesday. India’s gross domestic product (GDP) for the third quarter of 2016-17 Fiscal ended December, which recorded a growth of seven per cent and expansion in the manufacturing Purchasing Managers’ Index (PMI) to 50.7 in February, kept investors’ sentiments buoyed. Traders also took encouragement with Moody’s Investors Service’s report that demonetisation will be credit positive for India as it is likely to reduce tax avoidance and corruption. It also noted that, the country remains resilient to economic disruption and the worst of the liquidity crunch has passed, which should support a rebound in consumption and investment. However, gains remained limited with a report that the growth of eight core sectors slowed down to a five-month low of 3.4% in January mainly due to contraction in output of refinery products, fertiliser and cement. The growth rate of eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity was 5.7% in January 2016.

Traders were seen piling up positions in Realty, Metal and FMCG stocks, while selling was witnessed only in Media stocks. The top gainers from the F&O segment were Indiabulls Real Estate, Tata Global Beverages and Steel Authority of India. On the other hand, the top losers were Bajaj Finance, Bharat Financial Inclusion and Jaiprakash Associates. In the index option segment, maximum OI continues to be seen in the 8900-9500 calls and 8400-9000 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 1.57% and reached 13.57. The 50-share Nifty was up by 66.20 points or 0.75% to settle at 8,945.80.

Nifty March 2017 futures closed at 8976.05 on Wednesday at a premium of 30.25 points over spot closing of 8945.80, while Nifty April 2017 futures ended at 9004.60, at a premium of 58.80 points over spot closing. Nifty March futures saw an addition of 1.14 million (mn) units, taking the total outstanding open interest (OI) to 22.45 million (mn) units. The near month derivatives contract will expire on March 30, 2017.

From the most active contracts, Tata Steel March 2017 futures traded at a premium of 3.55 points at 503.60 compared with spot closing of 500.05. The numbers of contracts traded were 21,050.

Hindalco Industries March 2017 futures traded at a discount of 0.60 points at 189.55 compared with spot closing of 190.15. The numbers of contracts traded were 20,137.

Sun Pharmaceuticals Industries March 2017 futures traded at a premium of 2.40 points at 697.70 compared with spot closing of 695.30. The numbers of contracts traded were 13,696.

Vedanta March 2017 futures traded at a premium of 1.20 points at 266.60 compared with spot closing of 265.40. The numbers of contracts traded were 13,584.

Reliance Industries March 2017 futures traded at a premium of 8.45 points at 1240.00 compared with spot closing of 1,231.55. The numbers of contracts traded were 12,479.

Among Nifty calls, 9000 SP from the March month expiry was the most active call with an addition of 0.48 million open interests. Among Nifty puts, 8900 SP from the March  month expiry was the most active put with an addition of 0.48 million open interests. The maximum OI outstanding for Calls was at 9000 SP (4.61 mn) and that for Puts was at 8800 SP (3.96 mn). The respective Support and Resistance levels of Nifty are: Resistance 8971.53--- Pivot Point 8935.07--- Support --- 8909.33.

The Nifty Put Call Ratio (PCR) finally stood at 0.96 for March month contract. The top five scrips with highest PCR on OI were Hexaware Technologies (1.37), Mindtree (1.00), Britannia Industries (0.99), Jindal Steel & Power (0.98) and BEML (0.96).

Among most active underlying, Tata Steel witnessed an addition of 1.42 million units of Open Interest in the March month futures contract, followed by Hindalco Industries witnessing an addition of 5.46  million units  of Open Interest in the March  month contract, Maruti Suzuki India witnessed an addition of 0.09 million units of Open Interest in the March month contract, Reliance Industries witnessed an addition of 0.40 million units of Open Interest in the March  month future contract and Vedanta witnessed a contraction of 0.15 million units of Open Interest in the March  month future contract.