Benchmarks trade near day's high; India VIX cools 3%

Key benchmark indices traded near the day's high in early afternoon trade with decent gains. Sentiment also improved after the finance minister said the government would unveil measures to limit the impact of the coronavirus outbreak.

At 12:22 IST, the S&P BSE Sensex, surged 331.5 points or 0.81% at 41,225.88. The Nifty 50 index was up 101 points or 0.84% at 12,093.50.

The broader market outperformed the benchmark index. The S&P BSE Mid-Cap index was up 0.97% while the S&P BSE Small-Cap index surged 1.23%.

The market breadth was strong. On the BSE, 1338 shares rose and 857 shares fell. A total of 133 shares were unchanged. In Nifty 50 index, 39 stocks advanced while 11 stocks declined.

Economy:

Finance Minister Nirmala Sitharaman on Tuesday said that the Indian government will soon announce measures to deal with the impact of deadly Coronavirus outbreak on the domestic industry and the economy. The minister's statement came after a comprehensive consultation on the effects of the Coronavirus in a review meeting of the Ministry of Finance in the national capital. Sitharaman said she would hold a meeting with the secretaires of different ministries on Wednesday and then announce steps to deal with the situation in consultation with the Prime Minister's Office (PMO). FM also said there were no reports of shortage of medicines or medical equipment, instead the pharma industry is asking for lifting of ban on exports of certain items. However, there could be some disruptions in supplies and concerns have been expressed by the representative of pharma, solar and chemical industries, she said.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, fell 3.01% to 14.0725. The Nifty February 2020 futures were trading at 12,090.85, a premium of 10.7 points compared with the spot at 12,080.15.

On the options front, the Nifty option chain for 27 February 2020 expiry showed maximum call open interest (OI) of 25.25 lakh contracts at the 12,200 strike price. Maximum call writing was witnessed at 12,200 strike price, which shed 3.35 lakh contracts.

Maximum put OI of 38.32 lakh contracts was seen at 12,000 strike price. Massive put writing was observed at 12,000 strike which added 4.68 lakh contracts.

The option chain indicates that the Nifty will stay between 12,000 and 12,200 level till February expiry.

Stocks in Spotlight:

HDFC Mutual Fund reduced its aggregate holding in Balkrishna Industries to 5.99% from 8.06% earlier. The fund house sold 2.07% stake in the auto parts maker in the open market on 17 February 2020.

Shares of Balkrishna Industries were up 2.4% at Rs 1268 on BSE. It fell as much as 0.73% at the day's low of Rs 1229.15 in morning trade.

SpiceJet surged 4.16% to Rs 87.55 after the media reported that the low cost airliner has launched 20 new flights scheduled to commence operations from 29 March onward.

Infosys announced a long-term strategic partnership with GE Appliance, a Haier company, to effectively streamline IT operations. As an IT services partner, Infosys will help GE Appliances modernize its IT infrastructure and run IT in managed services mode as part of the overall innovation and optimization agenda. Shares of Infosys were trading 0.16% higher at Rs 798.70.

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