Nifty pare losses to close almost flat

Indian equity benchmark --Nifty-- trimmed most of its losses to settle slightly in red near its neutral line on Tuesday ahead of derivatives expiry of September series due on Thursday. After cautious opening, the index traded sluggish during the day as Asian Development Bank slashed the country’s growth forecast to 7 per cent in financial year 2017-18 from the July forecast of 7.4 per cent. The regional development bank also lowered forecast for the next financial year to 7.4 per cent from earlier forecast of 7.6 per cent. Weak global cues on the back of rising tensions in the Korean Peninsula also dented investors' risk-taking appetite. Furthermore, banking stocks were seen taking note of report that the Reserve Bank of India capped banks exposure to REITs and InvIts at 10% of the unit capital of such instruments. However, the market started recovering in the afternoon hours and managed to end above the crucial psychological level of 9,850 with taking support from Finance Minister Arun Jaitley’s statement that the government was in the process of undertaking measures to change the environment and provide a boost to the Indian economy. Some support also came with report that Minister Narendra Modi in its bid to boost the economy and bring reforms, constituted a five-member Economic Advisory Council (EAC), led by NITI Aayog Member Bibek Debroy. 

Traders were seen piling up positions in Realty, Metal and Auto stocks, while selling was witnessed in FMCG, IT and Media stocks. The top gainers from the F&O segment were Godfrey Phillips India, Dewan Housing Finance Corporation and Oil India. On the other hand, the top losers were Jaiprakash Associates, Rural Electrification Corporation and Bharat Petroleum Corporation. In the index option segment, maximum OI continues to be seen in the 9900-10500 calls and 9500-10000 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 3.09% and reached 12.92. The 50-share Nifty was down by 1.10 points or 0.01% to settle at 9,871.50.

Nifty September 2017 futures closed at 9866.95 on Tuesday at a discount of 4.55 points over spot closing of 9,871.50, while Nifty October 2017 futures ended at 9899.85 at a premium of 28.35 points over spot closing. Nifty September futures saw a contraction of 1.91 million (mn) units, taking the total outstanding open interest (OI) to 17.64 mn units. The near month derivatives contract will expire on September 28, 2017.

From the most active contracts, Infosys September 2017 futures traded at a premium of 3.60 point at 905.35 compared with spot closing of 901.75. The numbers of contracts traded were 23,137.

Dewan Housing Finance Corporation September 2017 futures traded at a premium of 3.40 points at 557.25 compared with spot closing of 553.85. The numbers of contracts traded were 23,009.

Sun Pharmaceutical Industries September 2017 futures traded at a premium of 1.80 points at 508.10 compared with spot closing of 506.30. The numbers of contracts traded were 18,865.

Vedanta September 2017 futures traded at a premium of 0.40 points at 318.05 compared with spot closing of 317.65. The numbers of contracts traded were 15,522.

Axis Bank September 2017 futures traded at a discount of 1.25 points at 511.45 compared with spot closing of 512.70. The numbers of contracts traded were 14,302.

Among Nifty calls, 9900 SP from the September month expiry was the most active call with an addition of 1.07 million open interests. Among Nifty puts, 9,800 SP from the September month expiry was the most active put with an addition of 0.63 million open interests.  The maximum OI outstanding for Calls was at 10000 SP (5.92 mn) and that for Puts was at 9800 SP (4.37 mn). The respective Support and Resistance levels of Nifty are: Resistance 9904.23--- Pivot Point 9858.62--- Support --- 9825.88.

The Nifty Put Call Ratio (PCR) finally stood at 0.80 for September month contract. The top five scrips with highest PCR on OI were the Ramco Cements (2.78), Oracle Financial Services Software (1.81), Indiabulls Real Estate (1.61), Dewan Housing Finance Corporation (1.58) and Kajaria Ceramics (1.27).

Among most active underlying, Tata Steel witnessed a contraction of 3.59 million units of Open Interest in the September month futures contract, followed by Dewan Housing Finance Corporation witnessing a contraction of 10.67 million units of Open Interest in the September month contract, Vedanta witnessed a contraction of 9.16 million units of Open Interest in the September month contract, Reliance Industries witnessed a contraction of  4.61 million units of Open Interest in the September month contract and State Bank of India witnessed a contraction of 13.10 million units of Open Interest in the September month future contract.