After a long weekend, Indian equity benchmark -- Nifty -- staged spectacular rally and closed above 9050 level for the first time on Tuesday on hopes of BJP strengthening reform agenda following emphatic victory in Uttar Pradesh and Uttarakhand. On Saturday, the BJP won an unexpected 312 out of 403 seats in the assembly elections of the India’s largest state, raising expectations of continued political stability, smooth implementation of a proposed goods and services tax and reforms in areas such as labour laws and land acquisition. Better-than-expected January industrial output (growing 2.7 percent) also aided sentiments. The index of industrial production (IIP) rose 2.7% in January from a year ago, the second fastest monthly growth this financial year behind 5.7% recorded in November 2016. Furthermore, market participants took some support with the report that India's foreign exchange reserves rose $1.2 billion to reach $364 billion as on February 17, 2017. Meanwhile, traders overlooked the surge in WPI inflation numbers, which came at a 3 year high. The annual rate of inflation, based on monthly WPI, stood at 6.55% (provisional) for the month of February, 2017, as compared to 5.25% (provisional) for the previous month and (-) 0.85% during the corresponding month of the previous year.
Traders were seen piling up positions in Realty, Financial services and Banking stocks, while selling was witnessed only in Metal stocks. The top gainers from the F&O segment were CEAT, Shriram Transport Finance Company and ICICI Bank. On the other hand, the top losers were Jaiprakash Associates, Bharat Financial Inclusion and Bosch. In the index option segment, maximum OI continues to be seen in the 8900-9500 calls and 8400-9100 puts indicating this is the trading range expectation.
The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 11.15% and reached 12.40. The 50-share Nifty was up by 152.45 points or 1.71% to settle at 9087.00.
Nifty March 2017 futures closed at 9103.00 on Tuesday at a premium of 16 points over spot closing of 9087.00, while Nifty April 2017 futures ended at 9127.40, at a premium of 40.40 points over spot closing. Nifty March futures saw an addition of 1.84 million (mn) units, taking the total outstanding open interest (OI) to 25.19 million (mn) units. The near month derivatives contract will expire on March 30, 2017.
From the most active contracts, Sun Pharmaceuticals Industries March 2017 futures traded at a premium of 4.25 points at 710.80 compared with spot closing of 706.55. The numbers of contracts traded were 43,108.
ICICI Bank March 2017 futures traded at a premium of 0.90 points at 287.60 compared with spot closing of 286.70. The numbers of contracts traded were 29,792.
Reliance Industries March 2017 futures traded at a premium of 4.75 points at 1293.00 compared with spot closing of 1288.25. The numbers of contracts traded were 20,961.
Larsen & Toubro March 2017 futures traded at a premium of 11.80 points at 1563.75 compared with spot closing of 1551.95. The numbers of contracts traded were 16,958.
State Bank of India March 2017 futures traded at a premium of 1.15 points at 275.90 compared with spot closing of 274.75. The numbers of contracts traded were 14,741.
Among Nifty calls, 9100 SP from the March month expiry was the most active call with a contraction of 0.44 million open interests. Among Nifty puts, 9000 SP from the March month expiry was the most active put with an addition of 1.46 million open interests. The maximum OI outstanding for Calls was at 9200 SP (5.40 mn) and that for Puts was at 8800 SP (4.61 mn). The respective Support and Resistance levels of Nifty are: Resistance 9119.67--- Pivot Point 9090.08--- Support --- 9057.42.
The Nifty Put Call Ratio (PCR) finally stood at 0.92 for March month contract. The top five scrips with highest PCR on OI were Colgate-Palmolive (India) (2.30), Bajaj-Auto (1.28), YES Bank (1.16), Jindal Steel & Power (1.12) and NIIT Technologies (1.10).
Among most active underlying, Reliance Industries witnessed an addition of 0.87 million units of Open Interest in the March month futures contract, followed by ICICI Bank witnessing a contraction of 2.27 million units of Open Interest in the March month contract, Sun Pharmaceuticals Industries witnessed an addition of 1.15 million units of Open Interest in the March month contract, Maruti Suzuki India witnessed a contraction of 4.95 thousands units of Open Interest in the March month future contract and Yes Bank witnessed an addition of 0.67 million units of Open Interest in the March month future contract.