News Analysis

Bulls make comeback; Nifty reclaims 11,000 mark

Updated on 14 August 2019 06:29 PM

After a sharp cut in previous session, an equity index -- Nifty50 - ended the trading session on higher note above its crucial 11,000 level. The index traded on a positive note since in the beginning, as traders got encouragement with government data showing that India’s retail inflation based on Consumer Price Index (CPI) eased marginally to 3.15% in the month of July 2019, on the back of softening fuel and light prices, even as inflation in the overall food basket moved up. CPI was 3.18% in June 2019, while it stood at 4.17% in July 2018. Also, inflation stayed below the RBI’s medium-term target of 4% for an eleventh straight month. Sentiment got boost after the report that the slowdown-hit economy may soon get a booster dose from the government with Finance Ministry working on a stimulus package for the industry may include a slew of financial measures ranging from tax cuts, subsidies and other incentives.

The index continued gaining momentum in the afternoon deals, taking support with easing wholesale price index (WPI) inflation data. Wholesale inflation fell to a multi-year low of 1.08 percent in July mainly on account of cheaper fuel and food items. Inflation based on WPI was at 2.02 percent in June this year and 5.27 percent in July 2018. Sentiments were also buoyed, as the commerce ministry laid out an online system for claiming benefits under Transport and Marketing Assistance (TMA) scheme, aimed at promoting exports of agri goods. However, market trimmed some of the initial gains in final hour of trade, as market-men got concerned with a private report that the overall slowdown in the economy coupled with factors like the NBFC crisis, developer defaults and bankruptcies have slackened the sentiments of the real estate sector, which may result a decline in residential sales in the next six months.

Most of the NSE sectoral indices ended in green, except Pharma. The top gainers from the F&O segment were Vodafone Idea, Jindal Steel & Power and Reliance Infrastructure. On the other hand, the top losers were Glenmark Pharmaceuticals, Sun Pharmaceutical Industries and Indiabulls Housing Finance. In the index option segment, maximum OI continues to be seen in the 11,400 - 11,600 calls and 10,900 - 11,200 puts indicating this is the trading range expectation.

India Volatility Index (VIX), a gauge for market’s short term expectation of volatility decreased by 7.99 and reached 16.35.The 50 share Nifty was up by 103.55 points or 0.95% to settle at 11,029.40.

Among, Nifty calls, 11,100 SP from the August month expiry was the most active call with a contraction of 0.004 million open interests. Among Nifty puts, 11000 from the August month expiry was the most active put with an addition of 0.34 million open interests. The maximum OI outstanding for Calls was at 11500 SP (2.50 mn) and that for Puts was at 11,000 SP (3.72 mn). The respective Support and Resistance levels of Nifty are: Resistance  11,093.17--Pivot Point  11,014.38--Support--10,950.62 .

The Nifty Put Call Ratio (PCR) finally stood at 1.15 for August month contract. The top five scrips with highest PCR on Oracle Financial Services Software (2.00), Asian Paints (1.40), Hindustan Unilever (1.40), Godrej Consumer Products(1.37), Century Textile and Industries (1.33).

Among most active underlying, Reliance Industries witnessed an addition of 7.18 million units of Open Interest in the August month futures contract, followed by State Bank of India witnessing a contraction of 0.12 million units of Open Interest in the August month contract, Indiabulls Housing Finance witnessed an addition of 2.55 million units of Open Interest in the August month contract, Sun Pharmaceutical Industries witnessed an addition of 3.07 million units of Open Interest in the August month contract and Bajaj Finance witnessed an addition of 0.34 million units of Open Interest in the August month future contract.