Nifty witnesses smart rally; conquers 8,150 mark

The local benchmark, Nifty witnessed exceptional rally on Monday snapping its two-day losing streak to end the day’s trade above the crucial 8,150 level gaining over a percent from its previous close. The gains were on account of broad based buying anticipating improvement in key macroeconomic indicators - inflation, forex reserves and industrial production to be announced this week. Also, crude dropping below $100 a barrel and provisional data from the exchanges showed that foreign funds were net buyers the previous trading session too supported upside. Foreign portfolio investors (FPIs) bought shares worth a net Rs 310.51 crore on September 05, 2014. Besides, the sentiment has improved after Goldman Sachs raised its Nifty target to 9,000 points for September 2015. Firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. However, there was some cautiousness with RBI governor Raghuram Rajan saying that aggressive monetary policy by developed economies may hurt global growth by pushing emerging markets to pile up foreign-exchange reserves instead of spending. Traders were seen piling up positions in Oil & Gas, FMCG and Bankex while selling was witnessed in Consumer Durables sector stocks. After a gap-up opening, nifty traded steady in a small rang for most part of the day but witnessed decent up move in last leg of trade.

Investors this week will closely track events like the hearing of coal blocks allocation case in Supreme Court, industrial output figures and inflation data as investors await fresh triggers for Nifty to resume its upward journey. In the index options segment, maximum OI continues to be seen in the 8200-8300 calls and 8000-7900 puts indicating the expected trading range.

The top gainers from the F&O segment were MRF, Apollo Tyres and HPCL. The top losers were Sun TV Network, Reliance Infrastructure and Shriram Transport Finance Company. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined for fifth consecutive day, which indicates that traders have slowed down buying options contracts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.10% and reached 12.79. The 50-share CNX Nifty increased by 87.05 points or 1.08% to settle at 8,173.90. Nifty September 2014 futures closed at 8,193.10 on Monday at a premium of 19.20 points over spot closing of 8,173.90, while Nifty October 2014 futures ended at 8,235.40 at a premium of 61.50 points over spot closing. Nifty September futures saw addition of 0.50 million (mn) units, taking the total outstanding open interest (OI) to 15.84 mn units. The near month derivatives contract will expire on September 25, 2014.

From the most active contracts, SBI September 2014 futures traded at a premium of 9.15 points at 2575.05 compared with spot closing of 2,565.90. The number of contracts traded were 27,747.

Apollo Tyre September 2014 futures traded at a premium of 1.10 points at 210.50 compared with spot closing of 209.40. The number of contracts traded were 20,135.

Reliance Industries September 2014 futures traded at a premium of 3.70 points at 1041.40 compared with spot closing of 1,037.70. The number of contracts traded were 25,063.

Tata Steel September 2014 futures traded at a premium of 1.65 points at 519.10 compared with spot closing of 517.45. The number of contracts traded were 16,403.

Crompton Greaves September 2014 futures traded at a premium of 0.20 points at 226.60 compared with spot closing of 226.40. The number of contracts traded were 17,278.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with a contraction of 0.05 million open interests. Among Nifty puts, 8,000 SP from the September month expiry was the most active put with an addition of 1.52 million open interests. The maximum OI outstanding for Calls was at 8200 SP (5.58 mn) and that for Puts was at 8,000 SP (8.49 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8194.02 --- Pivot Point 8160.08 --- Support --- 8139.97.

The Nifty Put Call Ratio (PCR) finally stood at 1.27 for September month contract. The top five scrips with highest PCR on OI were Sun TV (1.44), Jubilant Foodworks (1.32), Kotak Bank (1.12), Indiabulls Real Estate (1.07) and Colgate Palmolive (0.98). 

Among most active underlying, Apollo Tyres witnessed a contraction of 1.46 million of Open Interest in the September month futures contract, followed by State Bank of India witnessing an addition of 0.04 million of Open Interest in the September month contract; while IRB Infrastructure Developers witnessed a contraction of 0.44 million of Open Interest in the September month futures contract, Reliance Industries witnessed a contraction 0.25 million of Open Interest in the September month contract and Tata Steel witnessed a contraction of 0.46 million of Open Interest in the September month's future contract