Nifty makes robust recovery; surges 1.5%

Local equity benchmark Nifty made a powerful surge of over 1.5% on Wednesday, surpassing its psychological level of 10,450, supported by gains in finance service, media and PSU bank sectoral indices. The barometer made a firm start as investors were taking some support from a report stating that Reserve Bank of India (RBI) will inject Rs 12,000 crore liquidity into the system through purchase of government bonds on October 11 to meet the festival season demand for funds. Some optimism also came with a report that US government’s development finance institution Overseas Private Investment Corporation (OPIC) is keen to invest in the development of India’s infrastructure, port and solar energy sectors.

In the early noon session, the index continued the gaining monument, taking support from International Monetary Fund’s (IMF) report that it has trimmed its 2018 global economic growth forecast by 20 basis points from its July prediction, but retained its India growth projection at 7.3% for the current fiscal, as a trade war between the US and others has started to hit economic activity. Market participants remained optimistic with IMF Director of Fiscal Affairs Department’s statement that India's debt is lower than the best or emerging market economies in the world. He cautioned that the global debt has reached a new record high of $182 trillion in 2017. Investors overlooked a private report stating that India's retail inflation likely sped up in September on higher food and fuel costs, pushed up by a battered rupee and suggesting further policy tightening from the RBI.

All the sectoral indices ended in green on the NSE except IT. The top gainers from the F&O segment were Adani Power, Dewan Housing Finance Corporation and Shriram Transport Finance Company. On the other hand, the top losers were Bharti Infratel, Infosys and Tata Consultancy Services. In the index option segment, maximum OI continues to be seen in the 10,800-11,200 calls and 9,900 -10,200 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 9.35% and reached 17.90. The 50-share Nifty was up by 159.05 points or 1.54% to settle at 10,460.10.

Nifty October 2018 futures closed at 10465.75 on Wednesday, at a premium of 5.65 points over spot closing of 10460.10, while Nifty November 2018 futures ended at 10515.50, at a premium of 55.40 points over spot closing. Nifty October futures saw an addition of 0.20 million (mn) units, taking the total outstanding open interest (OI) to 19.74 mn units. The near month derivatives contract will expire on October 25, 2018.

From the most active contracts, Bajaj Finance October 2018 futures traded at a premium of 18.80 points at 2275.75 compared with spot closing of 2256.95. The numbers of contracts traded were 41,614.

Yes Bank October 2018 futures traded at a premium of 0.20 points at 235.05 compared with spot closing of 234.85. The numbers of contracts traded were 34,278.

Dewan Housing Finance Corporation October 2018 futures traded at a discount of 5.55 points at 280.75 compared with spot closing of 286.30. The numbers of contracts traded were 29,259.

Tata Motors October 2018 futures traded at a premium of 0.20 points at 189.45 compared with spot closing of 189.25. The numbers of contracts traded were 28,343.

Reliance Industries October 2018 futures traded at a premium of 1.65 points at 1104.65 compared with spot closing of 1103.00. The numbers of contracts traded were 25,470

The maximum OI outstanding for Calls was at 11,000 SP (4.32mn) and that for Puts was at 10,100 SP (3.80mn). The respective Support and Resistance levels of Nifty are: Resistance 10,522.22 ---- Pivot Point 10,420.23 --- Support --- 10,358.12.

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for October month contract. The top five scrips with highest PCR on OI were Page Industries (4.00), Bosch (2.00), Oil India (1.42), Berger Paints India (1.33) and Repco Home Finance (1.32).

Among most active underlying, Bajaj Finance witnessed a contraction of 0.09 million units of Open Interest in the October month futures contract, followed by Reliance Industries witnessing an addition of 0.20 million units of Open Interest in the October month contract, ICICI Bank witnessed an addition of 0.85 million units of Open Interest in the October month contract, State Bank of India witnessed an addition of 0.98 million units of Open Interest in the October month contract and Maruti Suzuki India witnessed a contraction of 0.15 million units of Open Interest in the October month future contract.