Regaining a crucial psychological level of 10,750, the local equity benchmark Nifty ended higher for second straight session on Wednesday. The key index started on cautious note, amid ICRA’s latest report stating that the proposed changes to disbursement norms for working capital credit will hit the liquidity profile of vulnerable companies. The agency also highlighted that Reserve Bank of India’s (RBI) plan to change disbursement norms of working capital will exert pressure on the liquidity profile of borrowers, specifically those having a high dependence on cash credit or overdraft facilities while lacking alternative sources of liquidity. Traders also got cautious with a report that the five-pronged strategy recommended by the panel of bankers for resolution of bad loans is a useful long-term concept, but tighter deadlines and near-term funding challenges remain.
However, Nifty soon erased losses and entered into green terrain to end near day’s highest point, as domestic sentiments got boost after the Indian services sector bounced back to growth in the month of June, on the back of strongest rise in new business. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose back above the 50.0 no-change mark in June, posting reading at 52.6 from 49.6 in May. The Nikkei India Composite PMI Output Index which measures both manufacturing and services too climbed to 53.3 in June from 50.4 in May. The markets participants also got comfort with NITI Aayog Vice Chairman Rajiv Kumar’s statement that the India’s economy is on the cusp of a major sustained and ongoing recovery, and it is poised to grow above 8% from the next year. Adding some optimism on the street, Union Cabinet approved the proposal to hike the Minimum Support Price (MSP) for Kharif crops, which was made in the Budget 2018 by Finance Minister Arun Jaitley.
All the sectoral indices ended in green except IT, Media and PSU Bank on the NSE. The top gainers from the F&O segment were Granules India, Balkrishna Industries and Bajaj Auto. On the other hand, the top losers were Shriram Transport Finance Company, NBCC and Max Financial Services.In the index option segment, maximum OI continues to be seen in the 10,800-11,000 calls and 10,500-10,600 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 2.63% and reached 12.65. The 50-share Nifty was up by 70 points or 0.65% to settle at 10,769.90.
Nifty July 2018 futures closed at 10771.35 on Wednesday, at a premium of 1.45 points over spot closing of 10769.90, while Nifty August 2018 futures ended at 10788.75, at a premium of 18.85 points over spot closing. Nifty July futures saw an addition of 0.86 million (mn) units, taking the total outstanding open interest (OI) to 21.17 mn units. The near month derivatives contract will expire on July 26, 2018.
From the most active contracts, Shriram Transport Finance Company July 2018 futures traded at a premium of 1.05 points at 1146.05 compared with spot closing of 1145.00. The numbers of contracts traded were 60,866.
Lupin July 2018 futures traded at a discount of 2.35 points at 935.65 compared with spot closing of 938.00. The numbers of contracts traded were 17,305.
Tata Steel July 2018 futures traded at a discount of 8.20 points at 562.80 compared with spot closing of 571.00. The numbers of contracts traded were 16,437.
Maruti Suzuki India July 2018 futures traded at a premium of 10.10 points at 9235.05 compared with spot closing of 9224.95. The numbers of contracts traded were 15,890.
Sun Pharmaceutical July 2018 futures traded at a premium of 2.58 points at 580.80 compared with spot closing of 577.95. The numbers of contracts traded were 15,842.
Among Nifty calls, 10800 SP from the July month expiry was the most active call with an addition of 0.06 million open interests. Among Nifty puts, 10600 SP from the July month expiry was the most active put with an addition of 0.01 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (3.67mn) and that for Puts was at 10,600 SP (5.17mn). The respective Support and Resistance levels of Nifty are: Resistance 10,805.45---- Pivot Point 10,741.60--- Support --- 10,706.05.
The Nifty Put Call Ratio (PCR) finally stood at 1.25 for July month contract. The top five scrips with highest PCR on OI were Adani Power (1.63), Oil India (1.63), Manappuram Finance (1.11), Indiabulls Housing Finance (1.08) and DHFL (1.07).
Among most active underlying, Shriram Transport Finance Company witnessed an addition of 2.59 million units of Open Interest in the July month futures contract, followed by Reliance witnessing an addition of 0.59 million units of Open Interest in the July month contract, Maruti Suzuki India witnessed a contraction of 0.05 million units of Open Interest in the July month contract, Lupin witnessed an addition of 0.26 million units of Open Interest in the July month contract and HDFC Bank witnessed an addition of 0.25 million units of Open Interest in the July month future contract.
