Nifty ends in positive zone; surpasses 11,350 level

The local equity benchmark Nifty ended in green on last trading day of the week, surpassing crucial psychological level of 11,350, supported by firm European markets. The index traded in jubilantly throughout the day, with the India meteorological department (IMD) stating that India is set to receive average rainfall during the last two months of the crucial monsoon season that stretches between June and September. It also added that the rainfall for the country as a whole during the second half of the season is likely to be 95 percent of a long period average.  Adding some optimism, GST Council member, Sushil Modi said that the reduction in GST tax rates might lead to in ‘better revenues’ in the long term but might lead to revenue shortfall in the next three-four months. Meanwhile, the government is ready, if required, to make further changes to the Insolvency and Bankrutpcy Code.

Domestic sentiments improved further after the seasonally adjusted Nikkei Services Business Activity Index climbed to 54.2 in the month of July from 52.6 in June, registering its highest reading since October 2016. Improved demand conditions along with pickup in employment levels helped bolster services business activity.  Investors overlooked Former Reserve Bank Governor C Rangarajan’s statement that the full implementation of recent hike in Minimum Support Prices (MSP) for some of the agricultural products may push financial system under stress. Traders even paid no heed towards International Monetary Fund’s latest report that real interest rates in India may drop by more than 150 basis points over the next decade. It also said that a decline in the India’s dependent youth (those from ages 0-15 years) between 2020 and 2030 is expected to result in a reduction of long-term interest rates in the country.

All the sectoral indices ended in green on the NSE. The top gainers from the F&O segment were PVR, Torrent Pharmaceuticals and Cummins India. On the other hand, the top losers were Jet Airways (India), Chennai Petroleum Corporation and Nestle India. In the index option segment, maximum OI continues to be seen in the 11,200-11,600 calls and 10,800 -11,200 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 3.80% and reached 12.07. The 50-share Nifty was up by 116.10 points or 1.03% to settle at 11,360.80.

Nifty August 2018 futures closed at 11395.75 on Friday, at a premium of 34.95 points over spot closing of 11360.80, while Nifty September 2018 futures ended at 11419.55, at a premium of 58.75 points over spot closing. Nifty August futures saw an addition of 0.75 million (mn) units, taking the total outstanding open interest (OI) to 26.22 mn units. The near month derivatives contract will expire on August 30, 2018.

From the most active contracts, Titan Company August 2018 futures traded at a premium of 1.10 points at 921.10 compared with spot closing of 920.00. The numbers of contracts traded were 33,687.

Axis Bank August 2018 futures traded at a premium of 0.60 points at 576.10 compared with spot closing of 575.50 . The numbers of contracts traded were 26,664.

Jet Airways (India) August 2018 futures traded at a premium of 2.65 points at 309.85 compared with spot closing of 307.20. The numbers of contracts traded were 23,630.

Indiabulls Housing Finance August 2018 futures traded at a discount of 6.75 points at 1372.85 compared with spot closing of 1379.60. The numbers of contracts traded were 22,934.

State Bank of India August 2018 futures traded at a premium of 0.10 points at 300.00 compared with spot closing of 299.90. The numbers of contracts traded were 19,131.

Among Nifty calls, 11400 SP from the August month expiry was the most active call with a contraction of 0.14 million open interests. Among Nifty puts, 11300 SP from the August month expiry was the most active put with an addition of 0.78 million open interests. The maximum OI outstanding for Calls was at 11,500 SP (3.14mn) and that for Puts was at 11,000 SP (4.96mn). The respective Support and Resistance levels of Nifty are: Resistance 11,387.68 ---- Pivot Point 11,341.12 --- Support --- 11,314.23.

The Nifty Put Call Ratio (PCR) finally stood at 1.48 for August month contract. The top five scrips with highest PCR on OI were Dish TV (1.57), ACC India (1.34), Godfrey Phillips India (1.33), ICICI Bank (1.17) and Oil India (1.09).

Among most active underlying, Reliance Industries witnessed an addition of 0.39 million units of Open Interest in the August month futures contract, followed by Axis Bank witnessing an addition of 1.52 million units of Open Interest in the August month contract, Titan Company  witnessed a contraction of 0.30 million units of Open Interest in the August month contract, State Bank of India witnessed an addition of 1.39 million units of Open Interest in the August month contract and ICICI Bank witnessed an addition of 0.55 million units of Open Interest in the August month future contract.