Nifty stages splendid performance; reclaims 9200 level

Starting the week with massive gains, Indian equity benchmark -- Nifty -- reclaimed its crucial resistance level of 9,200 on Monday. The index was buoyed by firm global cues, including Emmanuel Macron’s victory in the first round of voting in the French presidential elections, reducing the risk of a Brexit-like shock. Investors remained optimistic with Finance Minister Arun Jaitley’s statement that Indian economy will grow at a clip of 7.5% this fiscal, up from 7.1% in the previous year, and it remains resilient with low inflation, fiscal prudence and low deficit. Some support also came with International Monetary Fund’s (IMF) report which sees signs of recovery in the country’s economy post demonetization and has said that the impact of demonetization has abated and it pointed that indicators such as index of industrial production (IIP) and the purchasing managers’ index (PMI) have also shown a nice recovery. Moreover, Prime Minister Narendra Modi called upon states to ‘speed up capital expenditure and infrastructure creation’ to spur economic growth. He further said the vision of ‘New India’ can only be realized through the combined efforts and cooperation of all the states. While Pharma stocks came under selling pressure after the regulator has warned the doctors of action if they fail to adhere to its guideline on prescribing the drugs only in generic names and writing prescriptions legibly, IT stocks ended flat after the United States accused top IT companies TCS, Infosys and Cognizant of unfairly cornering the lion's share of H-1B visas by putting extra tickets into the lottery system.

Traders were seen piling up positions in Financial Services, Realty and Banking stocks, while selling was witnessed only in Media and Pharma stocks. The top gainers from the F&O segment were Indian Bank, ACC and Indiabulls Real Estate.  On the other hand, the top losers were Dish TV India, Ajanta Pharma and Lupin. In the index option segment, maximum OI continues to be seen in the 9100-9600 calls and 8500-9200 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 1.17% and reached 11.62. The 50-share Nifty was up by 98.55 points or 1.08% to settle at 9,217.95.

Nifty April 2017 futures closed at 9224.45 on Monday at a premium of 6.50 points over spot closing of 9217.95, while Nifty May 2017 futures ended at 9251.65, at a premium of 33.70 points over spot closing. Nifty April futures saw a contraction of 2.03 million (mn) units, taking the total outstanding open interest (OI) to 16.61 million (mn) units. The near month derivatives contract will expire on April 27, 2017.

From the most active contracts, Reliance Industries April 2017 futures traded at a discount of 0.30 points at 1417.55 compared with spot closing of 1,417.85. The numbers of contracts traded were 35,504.

HDFC Bank April 2017 futures traded at a discount of 8.35 points at 1523.65 compared with spot closing of 1,532.00. The numbers of contracts traded were 32,469.

Axis Bank April 2017 futures traded at a premium of 1.85 points at 498.90 compared with spot closing of 497.05. The numbers of contracts traded were 24,415.

ICICI Bank April 2017 futures traded at a premium of 0.20 point at 269.55 compared with spot closing of 269.35. The numbers of contracts traded were 24,216.

Infosys April 2017 futures traded at a premium of 2.65 points at 929.65 compared with spot closing of 927.00. The numbers of contracts traded were 22,343.

Among Nifty calls, 9200 SP from the April month expiry was the most active call with a contraction of 1.81 million open interests. Among Nifty puts, 9100 SP from the April month expiry was the most active put with an addition of 0.93 million open interests. The maximum OI outstanding for Calls was at 9200 SP (4.31 mn) and that for Puts was at 9100 SP (5.97 mn). The respective Support and Resistance levels of Nifty are: Resistance 9252.05--- Pivot Point 9191.30--- Support --- 9157.20.

The Nifty Put Call Ratio (PCR) finally stood at 1.37 for April month contract. The top five scrips with highest PCR on OI were BOSCH (2.06), United Breweries (1.63), DHFL (1.21), Bajaj Finance (1.20) and Tata Consultancy Services (1.19).

Among most active underlying, Reliance Industries witnessed a contraction of 2.50 million units of Open Interest in the April month futures contract, followed by HDFC Bank witnessing a contraction of 1.72 million units of Open Interest in the April  month contract, State Bank of India witnessed a contraction of 6.66  million units of Open Interest in the April month contract, ICICI Bank witnessed a contraction of 2.46 million units of Open Interest in the April  month future contract and Axis Bank witnessed a contraction of 3.55 million units of Open Interest in the April  month future contract.