Despite caution bled into global markets on uncertainties over the U.S. fiscal and monetary policies, Indian equity benchmark -- Nifty-- closed higher for second consecutive session on Friday. Sentiments got a boost after RBI Governor Urjit Patel’s statement that the demonetisation drive has achieved its objectives and has also led to several collateral benefits. He further said that India was at a ‘good place’ in terms of financial stability and the central bank will manage any sharp volatility in the markets arising out of global developments including concerns over U.S. President Donald Trump's protectionist policies. Traders took encouragement with Finance Minister Arun Jaitley’s statement that the whole process of remonetisation of new notes that began after scrapping Rs 500 and Rs 1000 notes on November 8, is almost complete now. He also said that the Reserve Bank of India (RBI) is closely monitoring cash supply position on a daily basis. However, upside remained capped with a private report that the impact of demonetisation is still visible and cash levels in the economy are not expected to be sufficient until March, which may keep trade volumes depressed for the next two months. Furthermore, India Ratings and Research (Ind-Ra) does not expect the performance of Indian companies to improve substantially in FY18. Pick-up in capital expenditure by the private sector is at least another two fiscal years away. Rise in commodity prices and uptick in interest rates amid rate hikes globally are two important risks to slow-but-improving demand for FY18.
Traders were seen piling up positions in Pharma, Banking and Financial Services stocks, while selling was witnessed in IT, Metal and Media stocks. The top gainers from the F&O segment were Jaiprakash Associates, Dewan Housing Finance Corporation and Just Dial. On the other hand, the top losers were Godrej Industries, Bharti Infratel and NHPC. In the index option segment, maximum OI continues to be seen in the 8700-9200 calls and 8000-8800 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 2.16 % and reached 13.43. The 50-share Nifty was up by 43.70 points or 0.50% to settle at 8,821.70.
Nifty February 2017 futures closed at 8827.00 on Friday at a premium of 5.30 points over spot closing of 8,821.70, while Nifty March 2017 futures ended at 8857.55, at a premium of 35.85 points over spot closing. Nifty February futures saw a contraction of 0.36 million (mn) units, taking the total outstanding open interest (OI) to 24.25 million (mn) units. The near month derivatives contract will expire on February 23, 2017.
From the most active contracts, HDFC Bank February 2017 futures traded at a discount of 4.40 points at 1370.60 compared with spot closing of 1,375.00. The numbers of contracts traded were 1,92,279.
ICICI Bank February 2017 futures traded at a discount of 1.40 points at 283.20 compared with spot closing of 284.60. The numbers of contracts traded were 23,186.
Axis Bank February 2017 futures traded at a premium of 1.55 points at 490.50 compared with spot closing of 488.95. The numbers of contracts traded were 21,144.
Reliance Capital February 2017 futures traded at a premium of 1.40 points at 518.20 compared with spot closing of 516.80. The numbers of contracts traded were 20,549.
Sun Pharmaceuticals Industries February 2017 futures traded at a premium of 1.25 points at 674.35 compared with spot closing of 673.10. The numbers of contracts traded were 19,454.
Among Nifty calls, 8900 SP from the February month expiry was the most active call with a contraction of 0.08 million open interests. Among Nifty puts, 8800 SP from the February month expiry was the most active put with an addition of 0.90 million open interests. The maximum OI outstanding for Calls was at 9000 SP (6.89 mn) and that for Puts was at 8500 SP (5.06 mn). The respective Support and Resistance levels of Nifty are: Resistance 8877.35--- Pivot Point 8840.80--- Support --- 8785.15.
The Nifty Put Call Ratio (PCR) finally stood at 1.24 for February month contract. The top five scrips with highest PCR on OI were Colgate-Palmolive (India) (2.66), Pidilite Industries (2.03), Oracle Financial Services Software (2.00), TVS Motor (1.52) and Eicher Motors (1.50).
Among most active underlying, HDFC Bank witnessed a contraction of 7.49 million units of Open Interest in the February month futures contract, followed by State Bank of India witnessing an addition of 2.85 million units of Open Interest in the February month contract, ICICI Bank witnessed an addition of 2.57 million units of Open Interest in the February month contract, Reliance Capital witnessed a contraction of 1.01 million units of Open Interest in the February month future contract and Tata Motors witnessed a contraction of 2.78 million units of Open Interest in the February month future contract.