Nifty extends gains for second straight day

Nifty finished Tuesday’s trading day on a positive note and extended gains for the second straight session. Index made a cautious start as traders took note of SBI research report stating that the Gross Domestic Product (GDP) growth in the September quarter is expected to decelerate to 7.5-7.6% over the previous three-month period mainly due to a slowdown in rural demand. Sentiments also remained pessimistic with India Ratings and Research’s statement that India is set to miss its fiscal deficit target for the year ending March 2019 due to a shortfall in revenues and lower-than-targeted disinvestment proceeds. Besides, SEBI’s latest report stated that Indian companies raised funds worth Rs 36,176 crore by issuing securities on public and private placement basis during October, registering a decline of 17% compared to September.

However, barometer pared all its losses and entered into positive territory in second half of the session as market participants took some support with the think-tank’s Vice-Chairman Rajiv Kumar’s statement the Niti Aayog is exploring ways to encourage more domestic companies to be among the top multinational corporations in the world. Some encouragement also came with CRISIL Research report that it is expecting 2018-19 to be a good one for India’s small and medium enterprise (SME) leather exporters, given a pick-up in demand from the US and expectations of the Donald Trump administration imposing tariffs on Chinese leather footwear - not in the tariff list currently - early next calendar year.

Traders were seen piling up positions in IT, PSU Bank and FIN Services stocks, while selling was witnessed in Pharma, Metal and Media. The top gainers from the F&O segment were Hindustan Construction Company, Allahabad Bank and Godfrey Phillips India. On the other hand, the top losers were Piramal Enterprises, Hero MotoCorp and Sun Pharmaceutical Industries. In the index option segment, maximum OI continues to be seen in the 10,900-11,100 calls and 10,400 -10,600 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 10.23% and reached 18.31. The 50-share Nifty was up by 57.00 points 0.54% to settle at 10,685.60.

Nifty November 2018 futures closed at 10684.85 on Tuesday, at a discount of 0.75 points over spot closing of 10685.60, while Nifty December 2018 futures ended at 10722.85, at a premium of 37.25 points over spot closing. Nifty November futures saw a contraction of 4.00 million (mn) units, taking the total outstanding open interest (OI) to 18.24 mn units. The near month derivatives contract will expire on November 29, 2018.

From the most active contracts, Yes Bank November 2018 futures traded at a premium of 0.25 points at 182.45 compared with spot closing of 182.20. The numbers of contracts traded were 53,659.

Sun Pharmaceutical Industries November 2018 futures traded at a premium of 2.90 points at 494.20 compared with spot closing of 491.30. The numbers of contracts traded were 46,654.

Reliance Industries November 2018 futures traded at a discount of 2.05 points at 1126.55 compared with spot closing of 1128.60. The numbers of contracts traded were 40,750.

Tata Steel November 2018 futures traded at a premium of 1.10 points at 522.70 compared with spot closing of 521.60. The numbers of contracts traded were 37,011.

HDFC Bank November 2018 futures traded at a discount of 3.15 points at 2060.85 compared with spot closing of 2064.00. The numbers of contracts traded were 30,584.

Among Nifty calls, 10700 SP from the November month expiry was the most active call with a contraction of 0.62 million open interests. Among Nifty puts, 10,600 SP from the November month expiry was the most active put with an addition of 0.45 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (2.86mn) and that for Puts was at 10,500 SP (3.84mn). The respective Support and Resistance levels of Nifty are: Resistance 10,721.72 ---- Pivot Point 10,659.03 --- Support --- 10,622.92.

The Nifty Put Call Ratio (PCR) finally stood at 1.77 for November month contract. The top five scrips with highest PCR on OI were Adani Power (2.22), IDBI (2.10), Adani Ports and Special Economic Zone (1.69), UPL (1.32) and Repco Home Finance (1.27).

Among most active underlying, Reliance Industries witnessed a contraction of 8.54 million units of Open Interest in the November month futures contract, followed by Sun Pharmaceutical Industries witnessing a contraction of 7.77 million units of Open Interest in the November month contract, Tata Steel witnessed a contraction of 12.11 million units of Open Interest in the November month contract, State Bank of India witnessed a contraction of 21.13 million units of Open Interest in the November month contract and Yes Bank witnessed a contraction of 31.99 million units of Open Interest in the November month future contract.