Nifty make smart recovery to end above 10,500 mark

Indian equity benchmark -- Nifty -- rebounds after a highly volatile session and finishes Tuesday’s trade on a higher note, as investors shrugged off Urjit Patel’s exit from the RBI and ignored jitters over state election results. Index made a gap down opening, as traders were concerned about Moody’s Investors Service’s statement that the independence of a country’s central bank is an important consideration while assessing a country’s institutional strength and any attempt by the government to curtail it would be credit negative. To a query on the sovereign rating impact of the developments around RBI, Moody’s said while the motivation for the RBI Governor’s resignation is unclear, the independence of a country’s central bank is an important consideration in their assessment of a sovereign’s institutional strength.

However, market slowly started recovering from the losses and entered into positive terrain in the afternoon deals, as market participants started getting solace with Commerce and Industry Minister Suresh Prabhu’s statement that the New Industrial Policy, which will replace the 27-year-old existing policy, has been sent for the Union Cabinet’s consideration. Index extended the gains in the last leg of the trading session, as traders took note of Former chief economic adviser Arvind Subramanian’s statement that the inclusion of petrol and diesel in the Goods and Services Tax (GST) ambit is not possible until the revenues under the new tax regime stabilize.

All the sectoral indices ended in green on the NSE. The top gainers from the F&O segment were Yes Bank, Adani Enterprises and Strides Pharma Science. On the other hand, the top losers were Hindustan Petroleum Corporation, Jet Airways (India) and Sun TV Network. In the index option segment, maximum OI continues to be seen in the 10,900-11,200 calls and 9900 -10,100 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 12.20% and reached 17.94. The 50-share Nifty was up by 60.70 points 0.58% to settle at 10,549.15.

Nifty December 2018 futures closed at 10581.10 on Tuesday, at a premium of 31.95 points over spot closing of 10549.15, while Nifty January 2019 futures ended at 10626.85, at a premium of 77.70 points over spot closing. Nifty December futures saw a contraction of 0.46 million (mn) units, taking the total outstanding open interest (OI) to 21.23 mn units. The near month derivatives contract will expire on December 27, 2018.

From the most active contracts, Yes Bank December 2018 futures traded at a discount of 0.30 points at 178.75 compared with spot closing of 179.05. The numbers of contracts traded were 53,773.

Reliance Industries December 2018 futures traded at a premium of 2.20 points at 1100.20 compared with spot closing of 1098.00. The numbers of contracts traded were 46,929.

HDFC Bank December 2018 futures traded at a premium of 7.90 points at 2064.05 compared with spot closing of 2056.15. The numbers of contracts traded were 32,198.

Sun Pharmaceutical Industries December 2018 futures traded at a discount of 0.55 points at 423.25 compared with spot closing of 423.80. The numbers of contracts traded were 30,565.

Kotak Mahindra Bank December 2018 futures traded at a discount of 12.70 points at 1226.30 compared with spot closing of 1239.00. The numbers of contracts traded were 27,998.

Among Nifty calls, 10800 SP from the December month expiry was the most active call with a contraction of 0.15 million open interests. Among Nifty puts, 10,000 SP from the December month expiry was the most active put with an addition of 0.77 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (4.99mn) and that for Puts was at 10,000 SP (5.31mn). The respective Support and Resistance levels of Nifty are: Resistance 10,632.92 ---- Pivot Point 10,483.38 --- Support --- 10,399.62.

The Nifty Put Call Ratio (PCR) finally stood at 1.04 for December month contract. The top five scrips with highest PCR on OI were V-Guard Industries (2.71), Mangalore Refinery & Petrochemicals (1.94), IDBI Bank (1.59), Adani Power (1.46) and Manappuram Finance (1.44).

Among most active underlying, Reliance Industries witnessed a contraction of 0.23 million units of Open Interest in the December month futures contract, followed by State Bank of India witnessing an addition of 2.09 million units of Open Interest in the December month contract, Kotak Mahindra Bank witnessed a contraction of 0.13 million units of Open Interest in the December month contract, ICICI Bank witnessed a contraction of 4.10 million units of Open Interest in the December month contract and Yes Bank witnessed a contraction of 2.12 million units of Open Interest in the December month future contract.