Nifty settles with decent gains; reclaims 10,500 mark

Key equity benchmark Nifty kicks off Monday's session with decent gains, surpassing its crucial psychological level of 10,500. IT and Pharma stocks witnessed healthy buying, whereas Auto and Metal stocks came under selling pressure. The index made a slightly positive start but soon entered red terrain amid weak macro-economic data. India’s industrial production measured by Index of Industrial Production (IIP) slowed down to a three-month low of 4.3% in the month of August 2018, as compared to 6.6% in the previous month and 4.8% in the same of last year, while retail inflation based on Consumer Price Index (CPI) inched up to 3.77% in the month of September 2018, as compared to a 10-month low of 3.69% recorded in August 2018 and 3.28% in September 2018. Investors remained jittery with Reserve Bank of India’s (RBI’s) data report that the country’s foreign exchange reserves declined by $915.8 million to $399.609 billion in the week to October 5 on account of a fall in foreign currency assets.

However, the barometer managed to erase all of its losses in the last leg of trade, as market participants drew some solace with SBI Ecowrap’s report that the RBI is not expected to hike key lending rates in the current fiscal. Some optimism also came with Economic Affairs Secretary S C Garg’s statement that structural reforms in areas like taxation and bankruptcy are helping the Indian economy in building resilience to global shocks and maintain a robust growth rate despite challenges. Besides, the credit rating agency Crisil Research’s report expecting the corporate revenue growth to grow by around 12% for the quarter ended September 30, 2018.

Traders were seen piling up positions in Pharma, IT and Media stocks, while selling was witnessed in Auto, Metal and PVT Bank. The top gainers from the F&O segment were TV18 Broadcast, KPIT Technologies and Adani Power. On the other hand, the top losers were SREI Infrastructure Finance, IRB Infrastructure Developers and Dewan Housing Finance Corporation. 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 increased by 1.38% and reached 18.88. The 50-share Nifty was up by 40.00 points or 0.38% to settle at 10,512.50.

Nifty October 2018 futures closed at 10517.45 on Monday, at a premium of 4.95 points over spot closing of 10512.50, while Nifty November 2018 futures ended at 10563.60, at a premium of 51.10 points over spot closing. Nifty October futures saw an addition of 0.53 million (mn) units, taking the total outstanding open interest (OI) to 19.79 mn units. The near month derivatives contract will expire on October 25, 2018.

From the most active contracts, IndusInd Bank October 2018 futures traded at a discount of 2.05 points at 1628.95 compared with spot closing of 1631.00. The numbers of contracts traded were 31,907.

Reliance Industries October 2018 futures traded at a premium of 3.45 points at 1141.20 compared with spot closing of 1137.75. The numbers of contracts traded were 24,377.

ICICI Bank October 2018 futures traded at a premium of 0.30 points at 313.25 compared with spot closing of 312.95. The numbers of contracts traded were 20,623.

Bajaj Finance October 2018 futures traded at a discount of 0.15 points at 2314.10 compared with spot closing of 2314.25. The numbers of contracts traded were 17,511.

State Bank of India October 2018 futures traded at a premium of 0.85 points at 264.00 compared with spot closing of 263.15. The numbers of contracts traded were 17,084. 

Among Nifty calls, 10500 SP from the October month expiry was the most active call with a contraction of 0.08 million open interests. Among Nifty puts, 10,400 SP from the October month expiry was the most active put with an addition of 0.25 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (4.84mn) and that for Puts was at 10,000 SP (3.49mn). The respective Support and Resistance levels of Nifty are: Resistance 10,555.82 ---- Pivot Point 10,482.98 --- Support --- 10,439.67.

The Nifty Put Call Ratio (PCR) finally stood at 0.97 for October month contract. The top five scrips with highest PCR on OI were Page Industries (5.00), Berger Paints India (1.36), Oil India (1.20), Ajanta Pharma (1.19) and Repco Home Finance (1.19).

Among most active underlying, Reliance Industries witnessed an addition of 1.13 million units of Open Interest in the October month futures contract, followed by Tata Consultancy Services witnessing a contraction of 0.10 million units of Open Interest in the October month contract, ICICI Bank witnessed an addition of 3.21 million units of Open Interest in the October month contract, Hindustan Unilever witnessed a contraction of 0.02 million units of Open Interest in the October month contract and IndusInd Bank witnessed an addition of 0.30 million units of Open Interest in the October month future contract.