Benchmarks turn volatile; Nifty Feb futures at discount

Amid a bout of volatility, key barometers firmed up after sharply paring gains in in early afternoon trade. The Nifty flirted with the 12,000 level. At 12:28 IST, the S&P BSE Sensex, was up 75.62 points or 0.19% at 40,865. The Nifty 50 index was up 28.55 points or 0.24% at 12,008.20.

The broader market outperformed the Sensex. The S&P BSE Mid-Cap index was up 1.06% while the S&P BSE Small-Cap index was up 0.51%.

The market breadth was positive. On the BSE, 1221 shares rose and 975 shares fell. A total of 149 shares were unchanged. In Nifty 50 index, 31 stocks advanced while 19 stocks declined.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, declined 1.13% to 14.2175. The Nifty February 2020 futures were trading at 11,960, a discount of 27.45 points compared with the spot at 11,987.45. Nifty Futures continued to experience backwardation. Backwardation occurs when the current spot price is higher than the prices trading in futures market.

On the options front, the Nifty option chain for 27 February 2020 expiry showed maximum call open interest (OI) of 20.38 lakh contracts at the 12,500 strike price. Call writing was witnessed at 12,000 strike price, which added 2.41 lakh contracts.

Maximum put OI of 26.84 lakh contracts was seen at 12,000 strike price. Massive put writing was observed at 12,000 strike which added 2.47 lakh contracts.

The option chain indicates that the Nifty will stay between 12,000 and 12,500 level till February expiry.

Buzzing Index:

The Nifty Metal index was up 0.61% at 2,609.95, continuing its winning run for third consecutive session. The index has gained 5.22% in three sessions.

Metal stocks firmed up after investors took cue from China's effort to stimulate its economy and mitigate the coronavirus outbreak concerns. China is reportedly the largest manufacturer and consumer of metals.

The Chinese government has announced numerous measures to support economic growth in the country faltered due to the outbreak of Coronavirus. One of the measures adopted by the Chinese Government is injecting $173 billion into the economy.

NMDC (up 2.34%), Steel Authority of India (up 1.72%), Tata Steel (up 1.12%), Tata Metaliks (up 1%), Jindal Steel & Power (up 0.87%), Vedanta (up 0.76%), Hindalco Industries (up 0.74%), National Aluminium Company (up 0.71%), Hindustan Zinc (up 0.6%) and JSW Steel Ltd (up 0.23%) were top gainers in metal segment.

Stocks in Spotlight:

Shares of REC jumped 6.33% to Rs 151.25 after consolidated net profit jumped 29.8% to Rs 1666.81 crore in Q3 December 2019 from Rs 1284 crore in Q3 December 2018. Profit before tax (PBT) stood at Rs 2386.47 crore in Q3 December 2019, up by 29.5% from Rs 1842.84 crore in Q3 December 2018. Total income increased by 39.2% to Rs 7719.77 crore in Q3 December 2019 from Rs 5545.78 crore in Q3 December 2018.

Shares of Apollo Pipes rose 2.81% to Rs 410.20 after standalone net profit rose 25.1% to Rs 6.67 crore in Q3 December 2019 (Q3 FY20) as against net profit of Rs 5.33 crore in Q3 December 2018 (Q3 FY19). Net sales rose 14.9% year-on-year (YoY) to Rs 100.02 crore in Q3 FY20. The Q3 numbers were disclosed after market hours yesterday, 4 February 2020.

Bharat Forge rose 1.61% to Rs 510.60 as the scrip extended gains for third consecutive session. North American Class 8 preliminary orders for January hit 17,700 units, a 10% increase from a year earlier when they were 16,105 units.

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