Bulls make come back; Nifty surpasses 12100 mark

Indian key benchmark-Nifty-settled with strong gains of over half a percent on Tuesday, as bulls made spectacular comeback on the street. The day began on a positive note, as traders took encouragement with report that the Reserve Bank of India (RBI) announced detailed rules for exempting incremental car, home and micro, small and medium enterprises (MSMEs) loans from maintaining cash reserve ratio (CRR). The RBI said CRR will not have to be maintained for five years or for the tenure of the loan, depending upon which-ever is less. This will essentially mean a lower cost for banks and will help improve liquidity. Afterwards, market started climbing higher to touched its intraday high point with Finance Minister Nirmala Sitharaman’s statement that bad loans of public sector banks (PSBs) came down to Rs 7.27 lakh crore at the end of September 2019 from Rs 8.96 lakh crore at the end of March 2018.

The index continued to trade in an optimistic mood with Agriculture Minister Narendra Singh Tomar’s statement that India is on track to become self-sufficient in production of the protein-rich commodity and will further boost the output to meet global demand. However, in last leg of the trade, market trimmed some of its gains, as anxiety came among investors ahead of the macroeconomic data-points due to be released during the week including CPI/WPI inflation and IIP data.

Most of the NSE sectoral indices ended in green, except FMCG. The top gainers from the F&O segment GAIL (India), Indiabulls Housing Finance and Sun TV Network. On the other hand, the top losers were National Aluminium Company, Vodafone Idea and United Spirits. 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 2.32% and reached 13.88. The 50 share Nifty up by 76.50 points or 0.64% to settle at 12,107.90.

Nifty February 2020 futures closed at 12128.00 (LTP) on Tuesday, at a premium of 20.10 points over spot closing of 12107.90, while Nifty March 2020 futures ended at 12155.50 (LTP), at a premium of 47.60 points over spot closing. Nifty February futures saw a contraction of 0.01 million (mn) units, taking the total outstanding open interest (OI) to 13.98 mn units. The near month derivatives contract will expire on February 27, 2020 (Provisional).

From the most active contracts, Indiabulls Housing Finance February 2020 futures traded at a discount of 5.00 points at 337.00 (LTP) compared with spot closing of 342.00. The numbers of contracts traded were 51,873 (Provisional).

State Bank of India February 2020 futures traded at a premium of 0.80 points at 325.30 (LTP) compared with spot closing of 324.50. The numbers of contracts traded were 24,452 (Provisional).

Reliance Industries February 2020 futures traded at a discount of 0.55 points at 1453.95 (LTP) compared with spot closing of 1454.50. The numbers of contracts traded were 19,982 (Provisional).

Tata Steel February 2020 futures traded at a premium of 1.85 points at 446.85 (LTP) compared with spot closing of 445.00. The numbers of contracts traded were 15,688 (Provisional).

ICICI Bank February 2020 futures traded at a premium of 2.00 points at 541.50 (LTP) compared with spot closing of 539.50. The numbers of contracts traded were 14,814 (Provisional).

Among, Nifty calls, 12200 SP from the February month expiry was the most active call with an addition of 0.009 million open interests. Among Nifty puts, 12000 from the February month expiry was the most active put with an addition of 0.008 million open interests. The maximum OI outstanding for Calls was at 12500 SP (2.76 mn) and that for Puts was at 12000 SP (3.55 mn). The respective Support and Resistance levels of Nifty are: Resistance 12,153.80 -- Pivot Point 12,126.40 -- Support -- 12,080.50.

The Nifty Put Call Ratio (PCR) finally stood at 1.23 for February month contract. The top five scrips with highest PCR on Tata Chemicals (1.39), Power Finance Corporation (1.27), Bajaj Finance (1.22), JSW Steel (1.19) and SRF (1.17).

Among most active underlying, State Bank Of India witnessed an addition of 1.19 million units of Open Interest in the February month futures contract, followed by Reliance Industries witnessing a contraction of 0.70 million units of Open Interest in the February month contract, Indiabulls Housing Finance witnessed a contraction of 1.02 million units of Open Interest in the February month contract, Bajaj Finance witnessed an addition of 0.05 million units of Open Interest in the February month contract and Tata Steel witnessed an addition of 0.76 million units of Open Interest in the February month future contract (Provisional).