Nifty ends marginally higher

Indian equity benchmark -- Nifty -- erased most of its early gains and ended marginally higher on Monday. The index saw a gap-up opening amid optimism over the GST council rates for goods & services. The government on Friday unveiled four bands of rates under the GST for services in line with those applying to goods, a big departure from the current single rate of 15% applied on most services. Sentiments remained optimistic with Revenue Secretary Hasmukh Adhia’s statement that inflation will fall by 2 percent on implementation of the goods and services tax (GST) and will create buoyancy in the economy. Moreover, firming Asian markets cheered by the weekend rally at the Wall Street, also aided the up-move. Some support also came with a joint survey carried out by the Confederation of Indian Industries (CII) and Indian Bank’s Association (IBA), stating that India’s economy is set to witness improvement in the overall conditions, owing to growth of external financial linkages, ample funds and pickup in the domestic economic activity. However, some investors remained concerned with India Rating’s report indicating that the transition to GST will disrupt the working capital cycle of businesses in the initial phase and thus easy liquidity in the system is essential for two to four months.

Traders were seen piling up positions only in FMCG and IT stocks, while selling was witnessed in PSU, Pharma and Realty stocks. The top gainers from the F&O segment were United Spirits, ITC and Bharti Infratel. On the other hand, the top losers were Bank of India, Jaiprakash Associates and Jet Airways (India). In the index option segment, maximum OI continues to be seen in the 9300-9700 calls and 8800-9500 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 0.88% and reached 11.20. The 50-share Nifty was up by 10.35 points or 0.11% to settle at 9,438.25.

Nifty May 2017 futures closed at 9443.65 on Monday at a premium of 5.40 points over spot closing of 9438.25, while Nifty June 2017 futures ended at 9447.25, at a premium of 9 points over spot closing. Nifty May futures saw a contraction of 1.29 million (mn) units, taking the total outstanding open interest (OI) to 17.81 million (mn) units. The near month derivatives contract will expire on May 25, 2017.

From the most active contracts, State Bank of India May 2017 futures traded at a premium of 0.45 points at 294.85 compared with spot closing of 294.40. The numbers of contracts traded were 31,730.

ITC May 2017 futures traded at a premium of 0.30 points at 303.30 compared with spot closing of 303.00. The numbers of contracts traded were 22,024.

Infosys May 2017 futures traded at a premium of 3.55 points at 963.55 compared with spot closing of 960.00. The numbers of contracts traded were 20,647.

Tata Motors May 2017 futures traded at a premium of 0.45 points at 449.65 compared with spot closing of 449.20. The numbers of contracts traded were 20,478.

Bank of India May 2017 futures traded at a discount of 2.30 points at 156.45 compared with spot closing of 158.75. The numbers of contracts traded were 18,823.

Among Nifty calls, 9500 SP from the May month expiry was the most active call with an addition of 0.41 million open interests. Among Nifty puts, 9400 SP from the May month expiry was the most active put with an addition of 0.09 million open interests. The maximum OI outstanding for Calls was at 9500 SP (6.55 mn) and that for Puts was at 9300 SP (6.45 mn). The respective Support and Resistance levels of Nifty are: Resistance 9481.97--- Pivot Point 9454.93--- Support --- 9411.22.

The Nifty Put Call Ratio (PCR) finally stood at 1.13 for May month contract. The top five scrips with highest PCR on OI were TVS Motor (1.52), Bharti Airtel (1.52), CEAT (1.45), Kotak Bank (1.42) and Britannia Industries (1.23).

Among most active underlying, State Bank of India witnessed a contraction of 0.94 million units of Open Interest in the May month futures contract, followed by Bank of India witnessing an addition of 1.99 million units of Open Interest in the May  month contract, ITC witnessed a contraction of 0.84 million units of Open Interest in the May month contract, Tata Steel witnessed a contraction of 2.34 million units of Open Interest in the May  month future contract and ICICI Bank witnessed a contraction of 6.89 million units of Open Interest in the May month future contract.