Nifty ends slightly higher on Tuesday

Indian equity benchmark -- Nifty -- ended slightly higher on Tuesday and held its crucial psychological level of 10,400 mark. The index made a slightly positive start but soon slipped into red terrain, amid anxiety ahead of the earnings season. Investors focused on key domestic cues of retail inflation data and industrial production data due tomorrow. Sentiments remained downbeat with foreign brokerage report highlighting that the trend of earnings downgrade for Indian equities that began three years ago is not showing signs of abating despite growth in the three quarters to December 2017. The report further highlighted that the consensus estimate for the earnings per share (EPS) of the MSCI India index for 2018 is lowered by 10.3% since December 2016. On the other hand, the EPS estimate of the MSCI Asia ex-Japan index has increased by 13.6%. However, in last leg of trade, Nifty erased all its initial losses and settled above the neutral line, as the traders took some support with the Asian Development Bank’s (ADB) latest report that growth in the Indian economy is expected to rebound to 7.3% in the fiscal year 2018 and will accelerate further to 7.6% in 2019, with the help of rise in productivity post Goods and Services Tax (GST) and investment revival on the back of banking reform. Investors also took some encouragement with World Economic Forum (WEF) President Borge Brende’s statement that India can play a crucial role in shaping the global fourth industrial revolution agenda in a responsible, scalable and inclusive manner, as more than 50 percent of its population is below the age of 27. He also said that the advent of the fourth industrial revolution can help India leapfrog traditional phases of development and accelerate its transition to a developed nation.

Traders were seen piling up positions in IT, Metal and Auto stocks, while selling was witnessed in PSU Bank, Reality and PVT Bank. The top gainers from the F&O segment were IRB Infrastructure Developers, National Aluminium and Vedanta. On the other hand, the top losers were Bharat Petroleum, Hindustan Petroleum and Indian Oil. In the index option segment, maximum OI continues to be seen in the 10,500-10,700 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 increased by 2.58% and reached 14.87. The 50-share Nifty was up by 14.90 points or 0.14% to settle at 10,417.15.

Nifty April 2018 futures closed at 10425.00 on Wednesday, at a premium of 7.85 points over spot closing of 10417.15, while Nifty May 2018 futures ended at 10453.30, at a premium of 36.15 points over spot closing. Nifty April futures saw an addition of 1.10 million (mn) units, taking the total outstanding open interest (OI) to 23.69 mn units. The near month derivatives contract will expire on April 26, 2018.

From the most active contracts, Vedanta April 2018 futures traded at a premium of 0.45 points at 297.60 compared with spot closing of 297.15. The numbers of contracts traded were 26,547.

Hindustan Petroleum April 2018 futures traded at a premium of 1.45 points at 337.35 compared with spot closing of 335.90. The numbers of contracts traded were 21,736.

Tata Steel April 2018 futures traded at a premium of 0.40 points at 608.40 compared with spot closing of 608.00. The numbers of contracts traded were 17,944.

Sun Pharmaceutical April 2018 futures traded at a premium of 1.80 points at 521.80 compared with spot closing of 520.00. The numbers of contracts traded were 17,282.

IRB Infrastructure April 2018 futures traded at a premium of 1.40 points at 281.10 compared with spot closing of 279.70. The numbers of contracts traded were 16,880.

Among Nifty calls, 10500 SP from the April month expiry was the most active call with an addition of 0.21 million open interests. Among Nifty puts, 10400 SP from the April month expiry was the most active put with an addition of 0.69 million open interests. The maximum OI outstanding for Calls was at 10500 SP (4.38mn) and that for Puts was at 10000 SP (4.57mn). The respective Support and Resistance levels of Nifty are: Resistance 10,445.00 ---- Pivot Point 10,400.30 --- Support --- 10372.45.

The Nifty Put Call Ratio (PCR) finally stood at 1.21 for April month contract. The top five scrips with highest PCR on OI were Bajaj Finance (1.43), Godrej Consumer Products (1.28), ICICI Bank (1.24), Irb Infrastructure Developers (1.18), and Axis Bank (1.14).

Among most active underlying, Reliance Industries witnessed an addition of 0.10 million units of Open Interest in the April month futures contract, followed by ICICI Bank witnessing a contraction of 3.08 million units of Open Interest in the April month contract, Vedanta witnessed a contraction of 0.10 million units of Open Interest in the April month contract, State Bank of India witnessed a contraction of 2.13 million units of Open Interest in the April month contract and IRB Infrastructure witnessed an addition of 1.56 million units of Open Interest in the April month future contract.