Nifty breaks eight days losing run amid rally on global markets

Breaking eight days losing streak, key equity benchmark --Nifty-- rebounded on Wednesday, rising 1.24%, amid strength in global stocks and signs that US-China trade relations could be improving. Index made a positive start, as traders remained encouraged with Care Ratings’ report that signalling an end to the liquidity crisis that NBFCs have been facing since last September, corporate bond issuances by them have risen by 30% in January, reflecting renewed confidence among both issuers as well as investors. Sentiments on the street improved with the government's statement that the revised Gross Domestic Product (GDP) figures for the demonetisation year was not cooked up and, in fact, the growth rates are likely to go up further due to the GST. On January 31, the government revised the GDP growth rates by 110 basis points (bps) from 7.1% to 8.2% for 2016-17, the year of demonetisation, and by 50 bps from 6.7% to 7.2% for fiscal 2017-18.

The market gained traction in the last hour of the trade, as sentiment got boost after the Cabinet approved a new electronics policy which aims to create a $400 billion electronic manufacturing ecosystem by 2025 and generate 1 crore jobs in the country. The National Electronics Policy 2019 proposes to boost mobile manufacturing in the country to 1 billion units worth $190 billion of which 600 million units worth $110 billion will be exported from the country. Traders were positive with a report that Union Minister of Commerce & Industry and Civil Aviation, Suresh Prabhu cleared a proposal aiming at simplifying the process of exemptions for Start-ups under Section 56 (2) (viib) of Income Tax Act, which will encourage investments in Start-Ups.

All sectoral indices ended in green on NSE. The top gainers from the F&O segment were Adani Power, KPIT Technologies and Allahabad Bank. On the other hand, the top losers were Page Industries, Reliance Capital and Jubilant Foodworks. In the index option segment, maximum OI continues to be seen in the 10,800-11,200 calls and 10,200 -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 7.65% and reached 17.05. The 50-share Nifty was up by 131.10 points 1.24% to settle at 10,735.45.

Nifty February 2019 futures closed at 10751.85 on Wednesday, at a premium of 16.40 points over spot closing of 10735.45, while Nifty March 2019 futures ended at 10790.75, at a premium of 55.30 points over spot closing. Nifty February futures saw a contraction of 0.22 million (mn) units, taking the total outstanding open interest (OI) to 21.77 mn units. The near month derivatives contract will expire on February 28, 2019.

From the most active contracts, Yes Bank February 2019 futures traded at a premium of 1.45 points at 218.40 compared with spot closing of 216.95. The numbers of contracts traded were 35,619.

Reliance Industries February 2019 futures traded at a premium of 2.65 points at 1238.20 compared with spot closing of 1235.55. The numbers of contracts traded were 33,382.

Tata Steel February 2019 futures traded at a discount of 1.30 points at 492.40 compared with spot closing of 493.70. The numbers of contracts traded were 22,698.

Tata Consultancy Services February 2019 futures traded at a premium of 8.95 points at 1922.25 compared with spot closing of 1913.30. The numbers of contracts traded were 21,862.

Reliance Capital February 2019 futures traded at a premium of 0.25 points at 145.20 compared with spot closing of 144.95. The numbers of contracts traded were 20,956.

Among Nifty calls, 10,700 SP from the February month expiry was the most active call with a contraction of 0.25 million open interests. Among Nifty puts, 10,600 SP from the February month expiry was the most active put with an addition of 0.59 million open interests. The maximum OI outstanding for Calls was at 11,000 SP (3.99mn) and that for Puts was at 10,400 SP (3.17mn). The respective Support and Resistance levels of Nifty are: Resistance 10,776.63 ---- Pivot Point 10,711.52 --- Support --- 10,670.33.

The Nifty Put Call Ratio (PCR) finally stood at 1.04 for February month contract. The top five scrips with highest PCR on OI were Shree Cements (2.50), Cipla (1.76), Ramco Cements (1.67), KPIT Technologies (1.56), and GMR Infrastructure (1.50).

Among most active underlying, Reliance Industries witnessed a contraction of 4.57 million units of Open Interest in the February month futures contract, followed by Tata Steel witnessing a contraction of 0.26 million units of Open Interest in the February month contract, Tata Consultancy Services witnessed a contraction of 0.68 million units of Open Interest in the February month contract, Yes Bank witnessed a contraction of 11.14 million units of Open Interest in the February month contract and State Bank of India witnessed a contraction of 1.84 million units of Open Interest in the February month future contract.