Nifty ends flat ahead of Q2 earnings season

Indian local benchmark Nifty ended the session flat with a positive bias on Monday, as anxiety spread among the investors ahead of second-quarter (Q2) earnings season. In a volatile session, the index traded in green territory for the most part of day, as investors remained optimistic after the Goods and Services Tax (GST) Council made sweeping changes on filing and payment of taxes, by easing rules for exporters and cutting tax rates on more than two dozen items. Investors also took some support with Union minister Ravi Shankar Prasad’s statement that the slowdown in the economic growth in Q1 of 2017-18 (April-June) is transitory and that will definitely pick-up pace in the next quarter as the macro fundamentals are strong. Sentiments also remained upbeat with Urjit Patel’s statement that economic growth is expected to pick up in third and fourth quarters to 7% plus. Besides, the market participants took note of Revenue Secretary Hasmukh Adhia’s statement that the government will clear pending GST refunds of exporters by November-end and over the next six months no tax will be levied on exports as the Council has decided to revert to the pre-GST era. However, upside remained capped with BMI Research’s report stating that the key policy rates may remain unchanged for rest of the fiscal year 2017-18, as the Reserve Bank of India (RBI) is likely to adopt a 'wait and see' approach due to rising inflation and downside pressure on the rupee.

All the sectoral indices ended in green on the NSE except Auto and PSU Bank. The top gainers from the F&O segment were SRF, IDFC and PVR.  On the other hand, the top losers were Jaiprakash Associate, Fortis Healthcare and Adani Enterprises. In the index option segment, maximum OI continues to be seen in the 9800-10500 calls and 9400-10000 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 2.47% and reached 11.39. The 50-share Nifty was up by 9.05 points or 0.09% to settle at 9,988.75.

Nifty October 2017 futures closed at 10016.55 on Monday at a premium of 27.80 points over spot closing of 9,988.75, while Nifty November 2017 futures ended at 10047.30 at a premium of 58.55 points over spot closing. Nifty October futures saw an addition of 0.30 million (mn) units, taking the total outstanding open interest (OI) to 23.65 mn units. The near month derivatives contract will expire on October 26, 2017.

From the most active contracts, Reliance Capital October 2017 futures traded at a discount of 0.20 point at 570.20 compared with spot closing of 570.40. The numbers of contracts traded were 17,956.

Tata Steel October 2017 futures traded at a premium of 3.75 points at 700.30 compared with spot closing of 696.55. The numbers of contracts traded were 13,044.

Sun Pharmaceutical Industries October 2017 futures traded at a premium of 2.55 points at 532.55 compared with spot closing of 530.00. The numbers of contracts traded were 11,884.

IDFC October 2017 futures traded at a discount of 0.05 points at 64.70 compared with spot closing of 64.75. The numbers of contracts traded were 9,431.

Jindal Steel & Power October 2017 futures traded at a discount of 0.20 points at 158.80 compared with spot closing of 159.00. The numbers of contracts traded were 9,372.

Among Nifty calls, 10000 SP from the October month expiry was the most active call with an addition of 0.28 million open interests. Among Nifty puts, 10000 SP from the October month expiry was the most active put with an addition of 0.96 million open interests.  The maximum OI outstanding for Calls was at 10000 SP (4.36mn) and that for Puts was at 9800 SP (5.78 mn). The respective Support and Resistance levels of Nifty are: Resistance 10016.52--- Pivot Point 9987.98--- Support --- 9960.22.

The Nifty Put Call Ratio (PCR) finally stood at 1.14 for October month contract. The top five scrips with highest PCR on OI were Cholamandalam Investment and Finance Company (7.19), Torrent Pharmaceuticals (4.80), Ramco Cements (3.79), V-Guard Industries (2.12) and Kajaria Ceramics (1.98).
 
Among most active underlying, Tata Steel witnessed an addition of 0.90 million units of Open Interest in the October month futures contract, followed by Reliance Capital witnessing an addition of 1.10 million units of Open Interest in the October month contract, Reliance Industries  witnessed an addition of 0.38 million units of Open Interest in the October month contract, Vedanta witnessed a contraction of  0.60 million units of Open Interest in the October month contract and State Bank of India witnessed a contraction of 0.39 million units of Open Interest in the October month future contract.