Nifty exhibits smart pull back; reclaims 11,850 mark

S&P CNX Nifty exhibited a decent pull back in Monday’s trade ending with a gain of over half a percent buoyed by positive global cues. The day begun on a positive note, as traders took support with report that the Reserve Bank of India (RBI) has relaxed the leverage ratio (LR) for banks to help them boost their lending activities. The leverage ratio stands reduced to 4% for Domestic Systemically Important Banks (DSIBs) and 3.5% for other banks effective from the quarter commencing October 1, 2019. Traders remain energized with a report that foreign investors infused a net amount of Rs 10,384 crore into the Indian capital markets in June and remained net buyers for the fifth month in a row on expectations of continued economic reforms.

In the afternoon session, the index continued its gaining momentum, taking support with report that the finance ministry will come up with further reforms in the indirect tax system with the introduction of new return system, rationalization of cash ledger system and a single refund-disbursing mechanism, among others. Traders took encouragement with a report that the government is working on a proposal to extend tax benefits to retail investors in its two exchange-traded funds - CPSE and Bharat-22 ETF. Traders ignored a monthly survey showing that the Indian manufacturing sector growth moderated in June, largely owing to softer increase in new work intakes, which in turn translated into slower rises in output and employment.

All sectoral indices ended in green on NSE except IT and Metal stocks. The top gainers from the F&O segment were Adani Power, Zee Entertainment Enterprises and Dish TV India. On the other hand, the top losers were Reliance Infrastructure, BPCL and ONGC. In the index option segment, maximum OI continues to be seen in the 11,900-12,100 calls and 11,400-11,600 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 2.34 and reached 14.60. The 50-share Nifty was up by 76.75 points or 0.65% to settle at 11,865.60.

Nifty June 2019 futures closed at 11903.65 on Monday, at a premium of 38.05 points over spot closing of 11865.60, while Nifty July 2019 futures ended at 11963.80, at a premium of 98.20 points over spot closing. Nifty June futures saw an addition of 0.12 million (mn) units, taking the total outstanding open interest (OI) to 18.59 mn units. The near month derivatives contract will expire on June 27, 2019.

From the most active contracts, Maruti Suzuki India June 2019 futures traded at a premium of 32.60 points at 6533.60 compared with spot closing of 6501.00. The numbers of contracts traded were 22,712.

Reliance Industries June 2019 futures traded at a premium of 6.25 points at 1275.15 compared with spot closing of 1268.90. The numbers of contracts traded were 20,488.

Zee Entertainment Enterprises June 2019 futures traded at a discount of 8.20 points at 358.80 compared with spot closing of 367.00. The numbers of contracts traded were 19,147.
 
Yes Bank June 2019 futures traded at a premium of 0.90 points at 109.75 compared with spot closing of 108.85. The numbers of contracts traded were 16,179.

HDFC Bank June 2019 futures traded at a premium of 15.55 points at 2501.55 compared with spot closing of 2486.00. The numbers of contracts traded were 14,123. 

Among Nifty calls, 12,000 SP from the July month expiry was the most active call with an addition of 0.01 million open interests. Among Nifty puts, 11,800 from the July month expiry was the most active put with an addition of 0.13 million open interests. The maximum OI outstanding for Calls was at 12,000 SP (1.45 mn) and that for Puts was at 11,500 SP (1.64 mn). The respective Support and Resistance levels of Nifty are: Resistance 11,889.90 -- Pivot Point 11,860.35 -- Support -- 11,836.05.

The Nifty Put Call Ratio (PCR) finally stood at 1.19 for July month contract. The top five scrips with highest PCR on OI were Bosch (3.00), Page Industries (1.67), Tata Motor DVR (1.46), Mahanagar Gas (1.39) and Strides Pharma Science (1.21).

Among most active underlying, Reliance Industries witnessed a contraction of 0.08 million units of Open Interest in the July month futures contract, followed by State Bank of India witnessing a contraction of 2.73 million units of Open Interest in the July month contract, Maruti Suzuki India witnessed an addition of 0.01 million units of Open Interest in the July month contract, Housing Development Finance Corporation witnessed an addition of 0.18 million units of Open Interest in the July month contract and HDFC Bank witnessed an addition of 0.13 million units of Open Interest in the July month future contract.