Nifty recovers strongly; settles with decent gains

The local equity benchmark Nifty settled with decent gains on Monday, surpassing its crucial psychological level of 11,000. The index made a flat start but heavy selling pressure pushed the index lower during the session. The street got cautious with the RBI’s report stating that India’s external debt declined 2.8% to $514.4 billion at June-end over the previous quarter on account of a decrease in commercial borrowings, short-term debt and non-resident Indian (NRI) deposits. Domestic sentiments also got hit with India Meteorological Department’s (IMD) report stating that at the end of the four-month-long monsoon season this year, the rainfall recorded in the country as a whole has remained 9% short of the normal mark. Traders got cautious with a report that overseas investors pulled out a massive Rs 21,000 crore ($3 billion) from the capital markets in September, making it the steepest outflow in four months, on widening current account deficit amid global trade tensions.

However, the Nifty managed to erase all of its losses in the last leg of the trade, buoyed by encouraging macroeconomic data viz. uptick in manufacturing activities and GST collection figures. Business activity in Indian manufacturing sector picked up in the month of September 2018, amid firmer gains in new orders, output and employment. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 52.2 in September from 51.7 in August. Besides, Goods and Services Tax (GST) mop-up rose to Rs 94,442 crore in September, from Rs 93,690 crore in the previous month. Investors took encouragement with the joint report between the International Monetary Fund (IMF), World Trade Organization (WTO) and World Bank stating that India's economic reforms and growth story provides compelling indication that openness in services contributes to long run growth performance.

All the sectoral indices ended in green on the NSE except Realty. The top gainers from the F&O segment were Dewan Housing Finance Corporation, Infibeam Avenues and Adani Power. On the other hand, the top losers were PC Jeweller, Jet Airways (India) and BEML. In the index option segment, maximum OI continues to be seen in the 11,300-11,700 calls and 10,700 -11,000 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 0.94% and reached 16.83. The 50-share Nifty was up by 77.85 points or 0.71% to settle at 11,008.30.

Nifty October 2018 futures closed at 11061.80 on Monday, at a premium of 53.50 points over spot closing of 11008.30, while Nifty November 2018 futures ended at 11103.75, at a premium of 95.45 points over spot closing. Nifty October futures saw a contraction of 0.50 million (mn) units, taking the total outstanding open interest (OI) to 16.11 mn units. The near month derivatives contract will expire on October 25, 2018.

From the most active contracts, Yes Bank October 2018 futures traded at a premium of 2.10 points at 201.95 compared with spot closing of 199.85. The numbers of contracts traded were 78,607.

Indiabulls Housing Finance October 2018 futures traded at a premium of 17.60 points at 909.65 compared with spot closing of 892.05. The numbers of contracts traded were 42,492.

Kotak Mahindra Bank October 2018 futures traded at a premium of 9.45 points at 1127.45 compared with spot closing of 1118.00. The numbers of contracts traded were 26,842.

Bajaj Finance October 2018 futures traded at a premium of 2.30 points at 2220.30 compared with spot closing of 2218.00. The numbers of contracts traded were 26,284.

Axis Bank October 2018 futures traded at a premium of 4.80 points at 597.55 compared with spot closing of 592.75. The numbers of contracts traded were 25,399.

Among Nifty calls, 11200 SP from the October month expiry was the most active call with a contraction of 0.18 million open interests. Among Nifty puts, 10800 SP from the October month expiry was the most active put with an addition of 0.36 million open interests. The maximum OI outstanding for Calls was at 11,500 SP (2.61mn) and that for Puts was at 10,800 SP (3.19mn). The respective Support and Resistance levels of Nifty are: Resistance 11,088.78 -- Pivot Point 10,955.17 -- Support -- 10,874.68.

The Nifty Put Call Ratio (PCR) finally stood at 1.21 for October month contract. The top five scrips with highest PCR on OI were Berger Paints India (3.33), Ajanta Pharma (2.53), Cholamandalam Investment and Finance (2.08), Ramco Cements (2.00) and Torrent Power (1.90).

Among most active underlying, Reliance Industries witnessed an addition of 0.44 million units of Open Interest in the October month futures contract, followed by Yes Bank witnessing an addition of 3.60 million units of Open Interest in the October month contract, Bajaj Finance witnessed an addition of 0.40 million units of Open Interest in the October month contract, Kotak Mahindra Bank witnessed an addition of 1.29 million units of Open Interest in the October month contract and Maruti Suzuki India witnessed an addition of 0.03 million units of Open Interest in the October month future contract.