Nifty ends higher on easing WPI inflation

Key Indian equity benchmark Nifty ended higher on Thursday, with the gains of more than four tenth of a percent, tracking firm global cues. After a positive start, the index maintained optimism throughout the day, as traders took some support with CRISIL’s latest report stating that the Reserve Bank’s revised framework for quicker and time-bound resolution of stressed assets is a long-term positive for banks. The report further noted that the new framework has the potential to bring about a big change in the approach of banks to monitor their exposures and resolution of non-performing assets (NPAs). Sentiments also got boost with report that India’s inflation on wholesale level softened for the second consecutive month in January 2018 and the wholesale price inflation (WPI) stood at 2.84 percent (provisional) in January as against 3.58 percent (provisional) for the previous month and 4.26 percent during the corresponding month of the previous year. The market participants also got some encouragement with a private report highlighting that consumption is reviving as the effect of demonetization fades and companies get used to the Goods and Services Tax (GST), with some recording multi-quarter highs in volume and sales in the October-December period, exceeding street expectations. Investors took note of Chief Economic Advisor Arvind Subramanian’s statement that although India has made a lot of progress towards achieving financial inclusion, a lot more needs to be done. He added that providing essential goods and services to citizens was only the first policy step towards financial inclusion. However, in the last leg of the trade, the Nifty lost some of its gains, on the back of profit booking.

Traders were seen piling up positions in FMCG, Metal and IT stocks, while selling was witnessed in Realty, PSU Banking and Media stocks. The top gainers from the F&O segment were Nestle India, United Spirits, and Shree Cement. On the other hand, the top losers were Punjab National Bank, Repco Home Finance, and Reliance Communications. In the index option segment, maximum OI continues to be seen in the 10,600-11,000 calls and 10000-10500 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 5.06% and reached 16.31. The 50-share Nifty was up by 44.60 points or 0.42% to settle at 10,545.50.

Nifty February 2018 futures closed at 10551.20 on Thursday, at a premium of 5.70 points over spot closing of 10545.50, while Nifty March 2018 futures ended at 10575.85, at a premium of 30.35 points over spot closing. Nifty February futures saw a contraction of 0.41 million (mn) units, taking the total outstanding open interest (OI) to 23.04 mn units. The near month derivatives contract will expire on February 22, 2018.

From the most active contracts, Punjab National Bank February 2018 futures traded at a premium of 1.60 points at 128.65 compared with spot closing of 127.05. The numbers of contracts traded were 72,669.

State Bank of India February 2018 futures traded at a discount of 0.10 points at 279.00 compared with spot closing of 279.10. The numbers of contracts traded were 24,682.

Axis Bank February 2018 futures traded at a premium of 0.30 points at 544.00 compared with spot closing of 543.70. The numbers of contracts traded were 21,107.

Sun Pharma February 2018 futures traded at a premium of 1.00 point at 576.40 compared with spot closing of 575.40. The numbers of contracts traded were 20,698.

PC Jeweller February 2018 futures traded at a discount of 1.85 points at 356.75 compared with spot closing of 358.60. The numbers of contracts traded were 19,032.

Among Nifty calls, 10600 SP from the February month expiry was the most active call with a contraction of 0.21 million open interests. Among Nifty puts, 10500 SP from the February month expiry was the most active put with an addition of 0.58 million open interests. The maximum OI outstanding for Calls was at 11000 SP (6.33 mn) and that for Puts was at 10500 SP (6.44 mn). The respective Support and Resistance levels of Nifty are: Resistance 10,605.38--- Pivot Point 10,558.22--- Support --- 10,498.33.

The Nifty Put Call Ratio (PCR) finally stood at 0.91 for February month contract. The top five scrips with highest PCR on OI were Godfrey Phillips India (2.73), Mangalore Refinery and Petrochemicals (1.18), Oracle Financial Services Software (1.00), Cholamandalam Investment and Finance (0.91) and Asian Paints (0.88).

Among most active underlying, Punjab National Bank witnessed an addition of 6.26 million units of Open Interest in the February month futures contract, followed by State Bank of India witnessing a contraction of 4.98 million units of Open Interest in the February month contract,  Reliance Industries witnessed a contraction 1.19 million units of Open Interest in the February month contract, ICICI Bank witnessed a contraction of 2.82 million units of Open Interest in the February month contract and Sun Pharmaceutical witnessed a contraction of 1.49 million units of Open Interest in the February month future contract.