Nifty ekes out record closing high; settles above 9600 mark

Indian equity benchmark Nifty extended its record setting run on Tuesday by surging to fresh all-time closing high, as investors cheered the early arrival of monsoon. Monsoon rains hit Kerala and the North East today, two days before the normal onset date, boosting optimism about a rebound in the rural economy. Sentiments also remained optimistic with World Bank's report stating that India will grow at 7.2% in the current fiscal and further up to 7.7% by 2019-20 on strong fundamentals, reform momentum and improving investment scenario. Some support also came with Finance Minister Arun Jaitley's statement that the GST regime will make tax collection efficient, check evasion and will also help India evolve as a more tax-compliant society.   However, weak trade in Asian markets, as volumes were muted due to holiday in Hong Kong and China, capped the gains. Besides, investors remained cautious with Niti Aayog Vice Chairman Arvind Panagariya's statement that the government does not have any immediate plans to create a bad bank to resolve the bad loans issue. Meanwhile, Securities and Exchange Board of India (SEBI) proposed to tighten norms for offshore derivative instruments (ODIs) by levying a fee as well as prohibiting them from being issued against derivatives except for those used for hedging purposes.

Traders were seen piling up positions in Pharma, PSU and Realty stocks, while selling was witnessed only in FMCG stocks. The top gainers from the F&O segment were Aurobindo Pharma, Jaiprakash Associates and The India Cements. On the other hand, the top losers were Bharat Heavy Electricals, Hexaware Technologies and Infibeam Incorporation.  In the index option segment, maximum OI continues to be seen in the 9400-10000 calls and 9000-9600 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 0.19% and reached 11.76. The 50-share Nifty was up by 19.65 points or 0.20% to settle at 9,624.55.

Nifty June 2017 futures closed at 9619.85 on Tuesday at a discount of 4.70 points over spot closing of 9624.55, while Nifty July 2017 futures ended at 9642.70, at a premium of 18.15 points over spot closing. Nifty June futures saw an addition of 0.30 million (mn) units, taking the total outstanding open interest (OI) to 20.79 million (mn) units. The near month derivatives contract will expire on June 29, 2017.

From the most active contracts, Aurobindo Pharma June 2017 futures traded at a discount of 1.10 points at 580.90 compared with spot closing of 582.00. The numbers of contracts traded were 39,123.

Rural Electrification Corporation June 2017 futures traded at a premium of 1.85 points at 206.85 compared with spot closing of 205.00. The numbers of contracts traded were 27,477.

Hindalco Industries June 2017 futures traded at a premium of 0.30 points at 203.95 compared with spot closing of 203.65. The numbers of contracts traded were 25,101.

Larsen & Toubro June 2017 futures traded at a discount of 0.55 points at 1769.45 compared with spot closing of 1,770.00. The numbers of contracts traded were 19,768.

Power Finance Corporation June 2017 futures traded at a premium of 0.95 points at 137.55 compared with spot closing of 136.60. The numbers of contracts traded were 18,479.

Among Nifty calls, 9700 SP from the June month expiry was the most active call with an addition of 0.30 million open interests. Among Nifty puts, 9500 SP from the June month expiry was the most active put with an addition of 0.61 million open interests. The maximum OI outstanding for Calls was at 9700 SP (4.21 mn) and that for Puts was at 9400 SP (4.94 mn). The respective Support and Resistance levels of Nifty are: Resistance 9646.17--- Pivot Point 9613.68--- Support --- 9592.07.

The Nifty Put Call Ratio (PCR) finally stood at 1.13 for June month contract. The top five scrips with highest PCR on OI were Bosch (8.00), Amara Raja Batteries (2.76), V-Guard Industries (2.40), Indraprastha Gas (1.46) and Aditya Birla Nuvo (1.42).

Among most active underlying, Rural Electrification Corporation witnessed an addition of 10.48 million units of Open Interest in the June month futures contract, followed by Hindalco Industries witnessing an addition of 0.41 million units of Open Interest in the June  month contract, Larsen & Toubro witnessed a contraction of 0.05 million units of Open Interest in the June month contract, DLF witnessed an addition of 1.79 million units of Open Interest in the June  month future contract and Bharat Heavy Electricals witnessed an addition of 2.75 million units of Open Interest in the June month future contract.