Nifty witnesses smart pull back rally; recaptures 7,600 mark

After witnessing drubbing for three consecutive sessions, CNX Nifty ended the session above its crucial 7,600 level with a gain of over seven tens of a percent on heavy buying by funds and retail investors owing to positive global cues. Some support also came in after Confederation of Indian Industry (CII) said that green shoots have started to appear in the manufacturing sector, with a majority of segments likely to post higher output. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 503.74 crore on August 08, 2014. Stocks from Auto, Realty and Capital Goods counters were supporting the markets’ uptrend, while those from Power, FMCG and Oil & Gas counters were adding to the underlying cautious undertone. Besides, Realty and infrastructure stocks were on buyers' radar as the Securities and Exchange Board of India (SEBI) has cleared the new norms for setting up and listing of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).

After gap up opening, nifty showed some strength in early afternoon trades however, it failed to breach the narrow 37-point range for most part of the day, ending the session above its crucial 7,600 mark with a gain of over fifty-seven points.

The top gainers from the F&O segment were Aurobindo Pharma, Mahindra & Mahindra and Mahindra & Mahindra Financial Services, on the other hand the top losers were Sun TV Network, GAIL and PTC India. In the index option segment, maximum OI continues to be seen in the 8000-7800 calls and 7500-7300 puts indicating this is the trading range expectation. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session, which indicates that traders have slowdown buying options contracts. 

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 4.24% and reached 13.99. The 50-share CNX Nifty increased by 57.40 points or 0.76% to settle at 7,625.95. Nifty August 2014 futures closed at 7,641.40 on Monday at a premium of 15.45 points over spot closing of 7,625.95, while Nifty September 2014 futures ended at 7,678.00 at a premium of 52.05 points over spot closing. Nifty August futures saw an addition of 0.31 million (mn) units, taking the total outstanding open interest (OI) to 12.51 mn units. The near month derivatives contract will expire on August 28, 2014.

From the most active contracts, Reliance Industries August 2014 futures traded at a premium of 4.20 points at 983.45 compared with spot closing of 979.25. The number of contracts traded were 10,722.

Tata Motors August 2014 futures traded at a premium of 2.25 points at 449.45 compared with spot closing of 447.20. The number of contracts traded were 15,564.

Tata Steel August 2014 futures traded at a premium of 1.70 points at 537.50 compared with spot closing of 535.80. The number of contracts traded were 13,445.

Aurobindo Pharma August 2014 futures traded at a premium of 1.40 points at 772.65 compared with spot closing of 771.25. The number of contracts traded were 17,700.

Adani Enterprises August 2014 futures traded at a premium of 4.00 points at 482.05 compared with spot closing of 478.05. The number of contracts traded were 12,328.Among Nifty calls, 7700 SP from the August month expiry was the most active call with a contraction of 0.02 million open interests. Among Nifty puts, 7,600 SP from the August month expiry was the most active put with an addition of 0.82 million open interests. The maximum OI outstanding for Calls was at 8000 SP (6.63 mn) and that for Puts was at 7,500 SP (5.98 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7771.72 --- Pivot Point 7741.43 --- Support --- 7691.02.

The Nifty Put Call Ratio (PCR) finally stood at 0.93 for August month contract. The top five scrips with highest PCR on OI were M&M (1.48), IDBI (1.44), Maruti Suzuki (1.32), Kotak Bank (1.30) and Bata India (1.19).  Among most active underlying, State Bank of India witnessed a contraction of 0.10 million of Open Interest in the August month futures contract, followed by Tata Motors witnessing an addition of 2.69 million of Open Interest in the August month contract; while Tata Steel witnessed a contraction of 0.70 million of Open Interest in the August month futures contract, Aurobindo Pharma witnessed a contraction 0.45 million of Open Interest in the August month contract and IRB Infrastructure Developers witnessed an addition of 1.40 million of Open Interest in the August month's future contract.