Nifty ends with minor gains

The local equity benchmark Nifty ended marginally higher on Tuesday, holding its crucial psychological level of 10,750. After a negative start, the index soon entered into green terrain and traded higher for most part of the session, as domestic sentiments were upbeat with Employees’ Provident Fund Organisation’s (EPFO) payroll data that as many as 41.26 lakh new jobs were created in the eight months till April this year, with largest ever addition of 6.85 lakh in April alone. Traders also took some encouragement with finance ministry’s statement that it has simplified the process of granting additional borrowing limits to the states, keeping in view the government’s policy for cooperative federalism. Some support also came with MSME secretary A K Panda’s statement that the credit guarantee to the micro and small enterprises (MSEs) sector will double to over Rs 40,000 crore this fiscal under the Credit Guarantee Fund Trust for MSE. Adding some support, Prime Minister Narendra Modi said that the rising crude prices have not resulted in a spike in inflation and the macroeconomic fundamentals of the country remain strong.

However, Nifty pared its gains in the final hour of trade and ended near neutral line. Sentiments turned pessimistic with report stating that the share of foreign portfolio investments (FPIs) in domestic capital markets through participatory notes (P-notes) slipped over 9-year low of more than Rs 93,000 crore at the end of May, amid stringent norms put in place by SEBI to check the misuse of these instruments. Investors also got cautious with the Reserve Bank of India’s (RBI’s) data report showing that Indian companies’ investments into their overseas subsidiaries/joint ventures have dropped by 63% to $1.17 billion in May 2018 as compared to $3.12 billion in May 2017. The market participants took note of a private report that the RBI is expected to push key policy rates higher again in order to keep inflation in check.

Traders were seen piling up positions in FMCG, IT and Media stocks, while selling was witnessed in Auto, Pharma and Metal. The top gainers from the F&O segment were Hexaware Technologies, United Spirits and PC Jeweller. On the other hand, the top losers were IDBI Bank, V-Guard Industries and Idea Adani Power. In the index option segment, maximum OI continues to be seen in the 10,800-11,000 calls and 10,600-10,700 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 1.71% and reached 12.79. The 50-share Nifty was up by 6.70 points or 0.06% to settle at 10,769.15.

Nifty June 2018 futures closed at 10766.90 on Tuesday, at a discount of 2.25 points over spot closing of 10769.15, while Nifty July 2018 futures ended at 10770.90, at a premium of 1.75 points over spot closing.  Nifty June futures saw a contraction of 2.50 million (mn) units, taking the total outstanding open interest (OI) to 20.43 mn units. The near month derivatives contract will expire on June 28, 2018.

From the most active contracts, Tata Motors June 2018 futures traded at a premium of 0.90 points at 277.50 compared with spot closing of 276.60. The numbers of contracts traded were 34,457.

Tata Steel June 2018 futures traded at a premium of 2.15 points at 550.50 compared with spot closing of 548.35. The numbers of contracts traded were 27,553.

Reliance Industries June 2018 futures traded at a discount of 3.55 points at 974.75 compared with spot closing of 978.30. The numbers of contracts traded were 22,164.

Vedanta June 2018 futures traded at a premium of 0.15 points at 231.15 compared with spot closing of 231.00. The numbers of contracts traded were 20,315.

Axis Bank June 2018 futures traded at a premium of 1.20 points at 514.05 compared with spot closing of 512.85. The numbers of contracts traded were 19,621.

Among Nifty calls, 10800 SP from the June month expiry was the most active call with a contraction of 0.65 million open interests. Among Nifty puts, 10700 SP from the June month expiry was the most active put with an addition of 5.05 million open interests. The maximum OI outstanding for Calls was at 11000 SP (5.35 mn) and that for Puts was at 10700 SP (5.05 mn). The respective Support and Resistance levels of Nifty are: Resistance 10,805.42 ---- Pivot Point 10,768.98 --- Support --- 10732.72.

The Nifty Put Call Ratio (PCR) finally stood at 1.26 for June month contract. The top five scrips with highest PCR on OI were Repco Home (1.50), Grasim Industries (1.14), Cummins India (1.13), Manappuram Finance (1.10) and Ajanta Pharma (0.98).

Among most active underlying, Reliance Industries witnessed a contraction of 6.14 million units of Open Interest in the June month futures contract, followed by Maruti Suzuki witnessing a contraction of 0.09 million units of Open Interest in the June month contract, Tata Consultancy Services witnessed a contraction of 2.88 million units of Open Interest in the June month contract, Tata Motors witnessed a contraction of 13.99 million units of Open Interest in the June month contract and State Bank of India witnessed a contraction of 7.31 million units of Open Interest in the June month future contract.