Nifty snaps 3-day losing streak; ends just shy of 10,400 mark

Snapping three day losing streak, Indian equity benchmark Nifty ended higher on Wednesday, with the gains of over one third of a percent. After a positive start, the index pared gains to trade choppy, due to cautiousness ahead of the expiry of derivative contracts for February tomorrow and also in view of developments around the massive PNB fraud. However, the market remained in green for most part of the day and further extended gains in the last leg of trade. Sentiments remained upbeat with Reserve Bank of India’s decision to constitute a five-member committee under the chairmanship of YH Malegam, a former RBI board member, in order to look into the reasons for high divergence observed in asset classification and provisioning in the credit portfolio of banks. Apart from this, the expert committee will check the factors leading to rising incidence of fraud in the banking system. Investors took support with a private report stating that India’s medium-term potential growth is likely to be above 7%, backed by policy reforms, higher investments and stable global growth environment.  The global financial services major further noted that India ranks higher in medium-term growth potential compared to other emerging markets like Brazil, Russia, Indonesia and China. Some relief also came with Canadian Prime Minister Justin Trudeau’s statement that corporate India has committed $1 billion worth of investments in his country, which will create over 5,000 jobs. Separately, India Ratings and Research (Ind-Ra) in its latest report has revised the infrastructure sector outlook to stable for the next financial year (FY19) from negative in the current fiscal year (FY18), amid signs of improvement in projects such as toll roads and wind.

Traders were seen piling up positions in IT, Media and FMCG stocks, while selling was witnessed in Pharma, Auto and Metal stocks. The top gainers from the F&O segment were IDBI Bank, NIIT Technologies and Voltas. On the other hand, the top losers were Sun Pharmaceutical, PC Jeweller, Housing Development and Infrastructure. In the index option segment, maximum OI continues to be seen in the 10,500-11,100 calls and 10,000-10,300 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 5.62% and reached 15.92. The 50-share Nifty was up by 1 37.05 points or 0.36% to settle at 10,397.45.

Nifty February 2018 futures closed at 10392.90 on Wednesday, at a discount of 4.55 points over spot closing of 10397.45, while Nifty March 2018 futures ended at 10414.85, at a premium of 17.40 points over spot closing.  Nifty February futures saw a contraction of 3.20 million (mn) units, taking the total outstanding open interest (OI) to 17.13 mn units. The near month derivatives contract will expire on February 22, 2018.

From the most active contracts, Sun Pharmaceutical February 2018 futures traded at a premium of 1.35 points at 525.25 compared with spot closing of 523.90. The numbers of contracts traded were 43,636.

Infosys February 2018 futures traded at a premium of 2.35 points at 1147.35 compared with spot closing of 1145.00. The numbers of contracts traded were 24,829.

Punjab National Bank February 2018 futures traded at a premium of 0.55 points at 117.40 compared with spot closing of 116.85. The numbers of contracts traded were 23,697.

Tata Steel February 2018 futures traded at a discount of 5.70 points at 637.80 compared with spot closing of 643.50. The numbers of contracts traded were 21,903.

Reliance Industries February 2018 futures traded at a discount of 0.65 points at 928.35 compared with spot closing of 929.00. The numbers of contracts traded were 20,704.

Among Nifty calls, 10400 SP from the February month expiry was the most active call with a contraction of 1.47 million open interests. Among Nifty puts, 10300 SP from the February month expiry was the most active put with an addition of 1.06 million open interests. The maximum OI outstanding for Calls was at 10500 SP (4.77 mn) and that for Puts was at 10300 SP (6.55 mn). The respective Support and Resistance levels of Nifty are: Resistance 10,432.50--- Pivot Point 10,391.05--- Support ---10,356.00.

The Nifty Put Call Ratio (PCR) finally stood at 0.92 for February month contract. The top five scrips with highest PCR on OI were V Guard (1.15), Cholamandalam Investment and Finance (1.04), MRF (1.00), Oracle Financial Services Software (1.00) and Asian Paints (1.00).

Among most active underlying, Sun Pharmaceutical witnessed a contraction of 13.28 million units of Open Interest in the February month futures contract, followed by Reliance Industries witnessing a contraction of 12.76 million units of Open Interest in the February month contract, State Bank of India witnessed a contraction of 14.60 million units of Open Interest in the February month contract, Tata Steel witnessed a contraction of 4.34 million units of Open Interest in the February month contract and Tata Consultancy Services witnessed a contraction of 1.90 million units of Open Interest in the February month future contract.