Nifty holds 11,700; broader market corrects

Key equity indices benchmarks held firm near the day's high in early afternoon trade. At 12:24 IST, the barometer index, the S&P BSE Sensex, gained 283.21 points or 0.72% at 39,857.68. The Nifty 50 index added 64.3 points or 0.55% at 11,726.85.

Strength in index heavyweight Reliance Industries (up 3.51%), Titan Company (up 4.88%) and Ultratech Cement (up 2.78%) supported the indices.

In the broader market, the S&P BSE Mid-Cap index was down 0.48% while the S&P BSE Small-Cap index fell 0.16%.

The market breadth was negative. On the BSE, 968 shares rose and 1437 shares fell. A total of 167 shares were unchanged.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, rose 2.36% to 20.1. The Nifty October 2020 futures were trading at 11,723.95, at a discount of 2.2 points compared with the spot at 11,726.15.

The Nifty option chain for 8 October 2020 expiry showed maximum call open interest (OI) of 35.97 lakh contracts at the 11,700 strike price. Maximum put OI of 45.78 lakh contracts was seen at 11,600 strike price.

The Nifty option chain for 29 October 2020 expiry showed maximum Call OI of 19.66 lakh contracts at the 12,000 strike price. Maximum Put OI of 35.37 lakh contracts was seen at 10,500 strike price.

COVID-19 Update:

India reported 907,883 active cases of COVID-19 infection and 104,555 deaths while 5,774,693 patients have been discharged, according to the data from the Ministry of Health and Family Welfare, Government of India. Total COVID-19 confirmed cases worldwide stood at 35,731,494 with 1,048,714 deaths.

SEBI Regulations:

Market regulator Securities and Exchange Board of India (Sebi) on Tuesday tightened its regulations of additional tier-1 bonds (AT-1 bonds). The regulator ensured that these risky instruments are less accessible to retail investors.

AT1 bonds are also known as perpetual non-cumulative preference shares, innovative perpetual debt instruments, and perpetual debt instruments. Typically, these are issued by banks to augment their capital base.

In a circular, the markets regulator said issuing AT1 bonds must be done compulsorily on the electronic book provider platform. Issuers and stock exchanges have to ensure that only qualified institutional buyers are issued these bonds. Further, the minimum allotment and trading lot size shall be Rs 1 crore.

Buzzing Index:

The Nifty Metal index declined 1.57% to 2,266.50. The index has fallen 2.26% in two sessions.

Vedanta (down 7.21%), Hindalco Industries (down 3.14%), Jindal Steel & Power (down 2.91%), Hindustan Zinc (down 2.57%), Steel Authority of India Ltd (down 2.18%), National Aluminium Company (down 1.42%), Coal India (down 1.16%), Tata Steel (down 1.15%), JSW Steel (down 0.81%) and NMDC (down 0.42%) were top losers.

Stocks in Spotlight:

CSB Bank rose 1.24% after the bank said that its total deposits increased 12.63% to Rs 17,468.73 crore in Q2 September 2020 from Rs 15,509.82 crore in Q2 September 2019. Of the total deposits, CASA was at Rs 5134.36 (up 17.44% YoY) while the term deposits were at the 12,334.37 crore (up 10.74% YoY) as on 30 September 2020. The bank's gross advances rose 11.92% to Rs 12,761.91 crore in Q2 FY21 from Rs 11,402.83 crore in Q2 FY20. Advances against gold & gold jewellery during the September 2020 quarter jumped by 47.10% year-on-year (YoY) to Rs 4,938.98 crore.

Solara Active Pharma Sciences surged 11.71% after a foreign brokerage initiated coverage on the stock with an outperform rating and a target price of Rs 1680 per share. The brokerage reported said that Solara is among top three pure-play API manufacturers in India. It added that long-term focus and growing presence in Contract Research & Manufacturing Services (CRAMS) suggest strong outlook even beyond FY23. The foreign research house believe that the company's growth is more sustainable than some of its Indian API peers. It expects the stock to re-rate further courtesy improving margin profile and strong regulatory track record.

IEX fell 2.41%. The board of company approved further investment of Rs 6.25 crore in IGX by subscribing its equity shares through rights issue. IEX holds 100% shareholding in Indian Gas Exchange (IGX), which provides an automated trading platform for transacting, clearing and settling trades in various types of gas based contracts.

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