Nifty logs strong gains on firm macroeconomic data

The local equity benchmark Nifty ended higher on last trading day of the week, logging strong gains for the second straight session. The index made a cheerful start and continued to rally throughout the session, on the back of firm global cues and positive macroeconomic data. India’s industrial production measured by Index of Industrial Production (IIP) grew at 6.6% in the month of July 2018, with good performance by the manufacturing sector and higher offtake of capital goods and consumer durables. India’s retail inflation based on Consumer Price Index (CPI) softened to a 10-month low of 3.69% in the month of August 2018, as compared to 4.17% in previous month (July), while Wholesale price index (WPI) inflation eased for the second straight month to 4.53% in August 2018, supported by declining minerals prices.

The street also took some support with a private report highlighting that private equity (PE) and venture capital (VC) investments stood at $1.6 billion across 50 deals in August, with buyout deals recording two times increase in value compared to the year-ago period. Meanwhile, the government has notified October 1 as the date for implementing the tax deducted at source (TDS) and tax collected at source (TCS) provisions under GST law. As per the Central GST (CGST) Act, the notified entities are required to collect TDS at 1% on payments to goods or services suppliers in excess of Rs 2.5 lakh. Also, states will levy 1% TDS under state laws.

All the sectoral indices ended in green on the NSE. The top gainers from the F&O segment were Balrampur Chini Mills, Granules India and Mahindra & Mahindra Financial Services. On the other hand, the top losers were Amara Raja Batteries, Cummins India and Jain Irrigation Systems. In the index option segment, maximum OI continues to be seen in the 11,600-12,000 calls and 11,300 -11,600 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 2.86% and reached 13.84. The 50-share Nifty was up by 145.30 points or 1.28% to settle at 11,515.20.

Nifty September 2018 futures closed at 11547.30 on Friday, at a premium of 32.10 points over spot closing of 11515.20, while Nifty October 2018 futures ended at 11584.80, at a premium of 69.60 points over spot closing. Nifty September futures saw a contraction of 0.52 million (mn) units, taking the total outstanding open interest (OI) to 26.68 mn units. The near month derivatives contract will expire on September 27, 2018.

From the most active contracts, Yes Bank September 2018 futures traded at a premium of 1.05 points at 323.45 compared with spot closing of 322.40. The numbers of contracts traded were 29,344.

Vedanta September 2018 futures traded at a premium of 1.65 points at 236.65 compared with spot closing of 235.00. The numbers of contracts traded were 21,160.

Tata Steel September 2018 futures traded at a premium of 4.45 points at 618.40 compared with spot closing of 613.95. The numbers of contracts traded were 17,746.

Jindal Steel & Power September 2018 futures traded at a premium of 1.45 points at 234.70 compared with spot closing of 233.25. The numbers of contracts traded were 17,579.

Reliance Industries September 2018 futures traded at a premium of 7.20 points at 1259.75 compared with spot closing of 1252.55. The numbers of contracts traded were 17,143.

Among Nifty calls, 11600 SP from the August month expiry was the most active call with a contraction of 0.40 million open interests. Among Nifty puts, 11400 SP from the August month expiry was the most active put with a contraction of 0.09 million open interests. The maximum OI outstanding for Calls was at 11,800 SP (4.08mn) and that for Puts was at 11,400 SP (4.06mn). The respective Support and Resistance levels of Nifty are: Resistance 11,548.78 ---- Pivot Point 11,489.67 --- Support --- 11,456.08.

The Nifty Put Call Ratio (PCR) finally stood at 1.14 for August month contract. The top five scrips with highest PCR on OI were Repco Home Finance (1.41), Shree Cement (1.00), Adani Ports and Special Economic Zone (0.92), Axis Bank (0.88) and UPL (0.88).

Among most active underlying, Reliance Industries witnessed an addition of 0.80 million units of Open Interest in the September month futures contract, followed by Yes Bank witnessing a contraction of 4.36 million units of Open Interest in the September month contract, Bajaj Finance witnessed a contraction of 0.15 million units of Open Interest in the September month contract, Aurobindo Pharma witnessed a contraction of 0.02 million units of Open Interest in the September month contract and Maruti Suzuki India witnessed a contraction of 0.06 million units of Open Interest in the September month future contract.