Nifty extends gains for third consecutive day on Wednesday

The local benchmark, Nifty extended its northward journey for third consecutive day on Wednesday and finished the day’s trade with gains of around one percent. Market made a cautious start, as traders were concerned with report that direct tax collections from April 2019 to February 3, 2020, stands at Rs 7.40 lakh crore versus the revised budget estimates of Rs 11.70 lakh crore. But, soon index gained momentum and traded in fine fettle, as traders took encouragement with a report that the Foreign Direct Investment (FDI) in India has been increasing on an annual basis and was at $34.90 billion till November of this fiscal.

In early afternoon deals, index gave up major of its gains to trade near neutral line for little time, as investors got wary, after the rating agency Crisil warned of potentially high stress in non-banking financial companies’ (NBFCs) wholesale book well above the reported bad loan numbers by March, indicating rising risks to their retail books. However, trade brought some cheer to the market and touched its intraday highpoint, taking support with a monthly survey that India's services sector activity surged to a seven-year high in January driven by sharp increase in new business orders, leading to job creation and business optimism amid favorable market conditions. The IHS Markit India Services Business Activity Index rose from 53.3 in December to 55.5 in January, signaling the strongest upturn in output in seven years.    

Most of the NSE sectoral indices ended in green, except Media. The top gainers from the F&O segment Tata Motors, Yes Bank and Shriram Transport Finance Company. On the other hand, the top losers were Zee Entertainment Enterprises, Hero MotoCorp and Dr. Reddy's Laboratories. In the index option segment, maximum OI continues to be seen in the 12000 -12,700 calls and 11,900 - 12,350 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 1.44% and reached 14.17. The 50 share Nifty was up by 109.50 points or 0.91% to settle at 12,089.15.

Nifty February 2020 futures closed at 12089.50 (LTP) on Wednesday, at a premium of 0.35 points over spot closing of 12089.15, while Nifty March 2020 futures ended at 12112.00 (LTP), at a premium of 22.85 points over spot closing. Nifty February futures saw an addition of 0.85 million (mn) units, taking the total outstanding open interest (OI) to 14.67 mn units. The near month derivatives contract will expire on February 27, 2020 (Provisional).

From the most active contracts, State Bank of India February 2020 futures traded at a premium of 1.45 points at 312.45 (LTP) compared with spot closing of 311.00. The numbers of contracts traded were 28,630 (Provisional).

Bharti Airtel February 2020 futures traded at a premium of 0.30 points at 536.80 (LTP) compared with spot closing of 536.50. The numbers of contracts traded were 27,099 (Provisional).

Zee Entertainment Enterprises February 2020 futures traded at a premium of 0.95 points at 229.85 (LTP) compared with spot closing of 228.90. The numbers of contracts traded were 27,049 (Provisional).

Reliance Industries February 2020 futures traded at a discount of 0.15 points at 1446.15 (LTP) compared with spot closing of 1446.30. The numbers of contracts traded were 26,920 (Provisional).

Tata Motors February 2020 futures traded at a premium of 0.50 points at 183.90 (LTP) compared with spot closing of 183.40. The numbers of contracts traded were 26,313 (Provisional).

Among, Nifty calls, 12000 SP from the February month expiry was the most active call with an addition of 0.001 units open interests. Among Nifty puts, 11900 from the February month expiry was the most active put with an addition of 0.56 units open interests. The maximum OI outstanding for Calls was at 12500 SP (2.31 mn) and that for Puts was at 12000 SP (2.87 mn). The respective Support and Resistance levels of Nifty are: Resistance 12,140.42 -- Pivot Point 12,046.88 -- Support --11,995.62.

The Nifty Put Call Ratio (PCR) finally stood at 1.25 for February month contract. The top five scrips with highest PCR on Tata Chemicals (1.62), Power Finance Corporation (1.21), Tata Consultancy Services (1.09), Escorts (1.07) and Bajaj Finance (1.05).

Among most active underlying, State Bank Of India witnessed an addition of 1.34 million units of Open Interest in the February month futures contract, followed by Reliance Industries witnessing an addition of 1.30 million units of Open Interest in the February month contract, Bharti Airtel witnessed an addition of 4.44 million units of Open Interest in the February month contract, Tata Motors witnessed an addition of 2.17 million units of Open Interest in the February month contract and Tata Global Beverages witnessed an addition of 2.66 million units of Open Interest in the February month future contract (Provisional).