Nifty reverse early losses to end higher; climbs over 10,900 mark

After trading in negative trajectory in early deals, key equity benchmark -- Nifty -- reversed its early losses to end higher on Monday, led by heavy buying by foreign investors ahead of the RBI's monetary policy review. Index made a cautions start as traders remained pessimistic with Moody’s Investors Service’s statement that the government will find it difficult to meet the fiscal deficit target of 3.4% in 2019-20 on account of higher spending and low revenue growth. Observing that Indian government’s debt is stubbornly high as a percentage of GDP, Moody's said it could be brought down only if the Centre sticks to the fiscal consolidation path. Sentiments also remained in the lackluster with a report that the government has reduced the allocation for Startup India programme in the Budget 2019-20 but added more monies to the Make in India kitty. According to the budget documents, the allocation for Startup India programme has been slashed to Rs 25 crore for 2019-20 from the revised estimate of Rs 28 crore in 2018-19.

Market bounced back from the losses in the last leg of the trade to end the session higher, as traders took some support with Minister of State for Commerce and Industry C R Chaudhary’s statement that the e-commerce sector is expected to keep growing in the future. He also said that a better enforcement of the FDI policy on e-commerce will contribute significantly to the growth of the sector. Some optimum also came with Economic Affairs Secretary Subhash Chandra Garg’s statement that the government would start disbursing substantial amount under the ‘Pradhan Mantri Kisan Samman Nidhi’ (PM-KISAN) scheme for small farmers in February itself as beneficiary data is already in place.

Traders were seen piling up positions in Pvt Bank, Financial services and Bank, while selling was witnessed in Pharma, Media and Realty. The top gainers from the F&O segment were Divi's Laboratories, Bata India and RBL Bank. On the other hand, the top losers were Reliance Power, Reliance Communications and Reliance Capital. In the index option segment, maximum OI continues to be seen in the 10,800-11,200 calls and 10,500 -11,000 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility increased by 0.02% and reached 15.72. The 50-share Nifty was up by 18.60 points 0.17% to settle at 10,912.25.

Nifty February 2019 futures closed at 10937.50 on Monday, at a premium of 25.25 points over spot closing of 10912.25, while Nifty March 2019 futures ended at 10967.70, at a premium of 55.45 points over spot closing. Nifty February futures saw an addition of 3,33,600 million (mn) units, taking the total outstanding open interest (OI) to 1,82,74,350 mn units. The near month derivatives contract will expire on February 28, 2019.

From the most active contracts, Dewan Housing Finance Corporation February 2019 futures traded at a discount of 0.30 points at 114.75 compared with spot closing of 115.05. The numbers of contracts traded were 42,485.

Reliance Industries February 2019 futures traded at a premium of 6.00 points at 1295.50 compared with spot closing of 1289.50. The numbers of contracts traded were 40,642.

Yes Bank February 2019 futures traded at a premium of 1.45 points at 180.85 compared with spot closing of 179.40. The numbers of contracts traded were 34,142.

Indiabulls Housing Finance February 2019 futures traded at a discount of 6.80 points at 643.25 compared with spot closing of 650.05. The numbers of contracts traded were 31,530.

Reliance Capital February 2019 futures traded at a discount of 0.65 points at 151.75 compared with spot closing of 152.40. The numbers of contracts traded were 29,201.

Among Nifty calls, 11,000 SP from the February month expiry was the most active call with an addition of 0.21million open interests. Among Nifty puts, 10,800 SP from the February month expiry was the most active put with an addition of 0.53 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (3.37mn) and that for Puts was at 10,700 SP (3.12mn). The respective Support and Resistance levels of Nifty are: Resistance 10,955.38 ---- Pivot Point 10,884.77 --- Support --- 10,841.63.

The Nifty Put Call Ratio (PCR) finally stood at 1.35 for February month contract. The top five scrips with highest PCR on OI were TCS (2.62), Shree Cements (2.25), Ramco Cements (1.75), Repco Home Finance (1.70) and Axis Bank (1.58).

Among most active underlying, Reliance Industries witnessed an addition of 0.57 million units of Open Interest in the February month futures contract, followed by State Bank of India witnessing a contraction of 2.79 million units of Open Interest in the February month contract, Titan Company witnessed a contraction of 0.36 million units of Open Interest in the February month contract, ICICI Bank witnessed a contraction of 0.01 million units of Open Interest in the February month contract and Tata Steel witnessed an addition of 0.23 million units of Open Interest in the February month future contract.