Nifty manages to close higher for second consecutive session

Indian equity benchmark -- Nifty -- erased some of its early gains in the late hour of trade but managed to close higher for second consecutive session on Friday, backed by banks on hopes of early NPA resolution. Optimism about the roll-out of Goods and Services Tax from 1 July 2017 also appeared to be aiding sentiments in the market. Some support also came with Finance Minister Arun Jaitley’s statement that that legislation related to Goods and Services Tax (GST) will have to be passed in the ongoing budget session, pointing out that the Centre and the states would otherwise lose their right to collect indirect taxes after September 15. Jaitley also said four bills supporting the Constitution amendment law on GST enacted last year will be introduced in the Lok Sabha shortly. However, upside remained capped on the report that the country’s current account deficit (CAD) widened to USD 7.9 billion or 1.4 percent of GDP in the October-December quarter on account of higher trade deficit. Meanwhile, the government has exempted FIIs from taxation of indirect transfers of Indian assets made after 2011 but has left prior period cases open for interpretation.

Traders were seen piling up positions in Banking, PSU and Financial Services stocks, while selling was witnessed only in IT, Media and Auto. The top gainers from the F&O segment were Oriental Bank of Commerce, Bank of India and Rural Electrification Corporation.  On the other hand, the top losers were Jindal Steel & Power, Grasim Industries and Aditya Birla Nuvo. In the index option segment, maximum OI continues to be seen in the 8900-9500 calls and 8400-9100 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 1.20% and reached 11.97. The 50-share Nifty was up by 21.70 points or 0.24% to settle at 9,108.00.

Nifty March 2017 futures closed at 9118.30 on Friday at a premium of 10.30 points over spot closing of 9108.00, while Nifty April 2017 futures ended at 9150.50, at a premium of 42.50 points over spot closing. Nifty March futures saw a contraction of 0.43 million (mn) units, taking the total outstanding open interest (OI) to 25.78 million (mn) units. The near month derivatives contract will expire on March 30, 2017.

From the most active contracts, State Bank of India March 2017 futures traded at a premium of 0.70 points at 276.65 compared with spot closing of 275.95. The numbers of contracts traded were 22,313.

Infosys March 2017 futures traded at a premium of 3.60 points at 1031.70 compared with spot closing of 1,028.10. The numbers of contracts traded were 19,583.

Bank of Baroda March 2017 futures traded at a premium of 0.75 points at 169.05 compared with spot closing of 168.30. The numbers of contracts traded were 19,324.

ICICI Bank March 2017 futures traded at a discount of 0.50 points at 275.05 compared with spot closing of 275.55. The numbers of contracts traded were 18,039.

Punjab National Bank March 2017 futures traded at a premium of 0.25 points at 141.45 compared with spot closing of 141.20. The numbers of contracts traded were 13,952.

Among Nifty calls, 9200 SP from the March month expiry was the most active call with an addition of 0.56 million open interests. Among Nifty puts, 9100 SP from the March month expiry was the most active put with an addition of 0.64 million open interests. The maximum OI outstanding for Calls was at 9200 SP (6.64 mn) and that for Puts was at 8800 SP (5.40 mn). The respective Support and Resistance levels of Nifty are: Resistance 9131.23--- Pivot Point 9110.32--- Support --- 9087.08.

The Nifty Put Call Ratio (PCR) finally stood at 1.11 for March month contract. The top five scrips with highest PCR on OI were Kotak Mahindra Bank (1.28), YES Bank (1.12), Cairn India (1.08), Ultratech Cement (1.06) and Adani Ports & Special Economic Zone (1.05).

Among most active underlying, State Bank of India witnessed a contraction of 5.55 million units of Open Interest in the March month futures contract, followed by Punjab National Bank witnessing a contraction  of 1.61 million units of Open Interest in the March  month contract, Yes Bank witnessed a contraction of 0.84 million units of Open Interest in the March month contract, Reliance Industries witnessed a contraction of 0.57 million units of Open Interest in the March  month future contract and ICICI Bank witnessed a contraction of 6.07 million units of Open Interest in the March  month future contract.