Nifty trims gains; ends marginally higher ahead of the September F&O expiry week

After witnessing a boisterous rally in the previous session, Nifty consolidated on Friday exhibiting a lackluster trading session as investors turned cautious and booked profits ahead of the September F&O expiry week. However, some respite came on account of low level buying by funds and retail investors, driven by rising optimism over trade ties with China. India has signed a 5-year trade and economic cooperation agreement with China with a view to improve the trade balance and obtain $20 billion Chinese investments. Besides, sentiments also remained upbeat as fears of capital outflows receded on US Fed's continued pledge to retain rates at low levels. However, upside gains were capped as selling by foreign funds weighed on some investor sentiments. Foreign funds sold shares worth Rs 9.5 crore on September 18, as per provisional stock exchange data. Traders were seen piling positions in IT, TECK and Healthcare while selling was witnessed in Capital Goods, Oil & Gas and Auto sector stocks.

After making a flat but positive start, nifty showed some strength in early morning trades but failed to sustain it on account of persistent profit-booking by funds and retail investors. Nifty touched its intraday day low in afternoon trades but some recovery emerged from day’s low which pushed the index just above its neutral line. Finally, Nifty ended the session above its crucial 8,100 mark with positive bias.

Nifty is likely to remain volatile in the near future as traders roll over positions in the futures & options (F&O) segment from the this month's series to October series ahead of the F&O expiry next week. In the index options segment, maximum OI continues to be seen in the 8300-8200 calls and 8000-7900 puts indicating the expected trading range.

The top gainers from the F&O segment were India Cements, IRB Infrastructure and IDEA. The top losers were Jindal Steel, JP Associate and Voltas. Moreover, India VIX - the gauge of underlying volatility in the market – has declined as traders turned cautious ahead of the F&O expiry next week.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.55% and reached 11.88. The 50-share CNX Nifty increased by 6.70 points or 0.08% to settle at 8,121.45. Nifty September 2014 futures closed at 8131.00 on Friday at a premium of 9.55 points over spot closing of 8,121.45, while Nifty October 2014 futures ended at 8182.10 at a premium of 60.65 points over spot closing. Nifty September futures saw contraction of 0.84 million (mn) units, taking the total outstanding open interest (OI) to 12.74 mn units. The near month derivatives contract will expire on September 25, 2014.

From the most active contracts, Tata Global Beverages September 2014 futures traded at a premium of 0.20 points at 169.15 compared with spot closing of 168.95. The number of contracts traded were 15,344.

HDFC Bank September 2014 futures traded at a premium of 4.05 points at 863.55 compared with spot closing of 859.50. The number of contracts traded were 16,854.

Reliance Industries September 2014 futures traded at a premium of 3.80 points at 997.75 compared with spot closing of 993.95. The number of contracts traded were 32,010.

Axis Bank September 2014 futures traded at a discount of 2.80 points at 407.20 compared with spot closing of 410.00. The number of contracts traded were 24,016.

Aurobindo Pharma September 2014 futures traded at a premium of 7.05 points at 868.55 compared with spot closing of 861.50. The number of contracts traded were 18,341.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with an addition of 0.82 million open interests. Among Nifty puts, 8,100 SP from the September month expiry was the most active put with a contraction of 0.51 million open interests. The maximum OI outstanding for Calls was at 8200 SP (7.71 mn) and that for Puts was at 8,000 SP (8.42 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8153.12 --- Pivot Point 8129.23 --- Support --- 8097.57.

The Nifty Put Call Ratio (PCR) finally stood at 1.13 for September month contract. The top five scrips with highest PCR on OI were OFSS (2.75), Dr. Reddy's Laboratories (2), Maruti Suzuki (1.36), Kotak Bank (1.36) and Cipla (1.29). 

Among most active underlying, State Bank of India witnessed a contraction of 0.22 million of Open Interest in the September month futures contract, followed by Infosys witnessing an addition of 0.19 million of Open Interest in the September month contract; while Reliance Industries witnessed a contraction of 0.49 million of Open Interest in the September month futures contract, Axis Bank witnessed a contraction 0.37 million of Open Interest in the September month contract and Arvind witnessed a contraction of 1.28 million of Open Interest in the September month's future contract.