Nifty starts fresh week on optimistic note

The domestic 50-share index, Nifty, commenced the fresh week, on optimistic note on emergence of buying by funds and retail investors ahead of the F&O expiry this week. After a gap down opening, Nifty traded in a narrow range for first half of the session, but witnessed a fine recovery in afternoon, which pushed the nifty above its neutral line. The index successfully concluded the session in green despite some profit booking in last half-hour of trade. Traders were seen piling positions in Consumer Durables, FMCG and Auto while selling was witnessed in Metal, Healthcare and Infrastructure sector stocks.

Sentiments got a boost after data of Department of Industrial Policy and Promotion indicated that foreign direct investment in the services sector rose marginally to $1.03 billion during the April-July period of the ongoing fiscal, compared to $1.02 billion during the same period of the previous fiscal, 2013-14. Furthermore, in a fresh development for the long pending Goods and Services Tax (GST) issue, Former Revenue Secretary Sumit Bose who is also a member of the Expenditure Management Commission, underscored that Finance Commission was well equipped to be involved in the exercise of compensating states for revenue losses following implementation of the Goods and Services Tax. However, a weak closing in Asian stocks and a lower opening in Europe, capped the gains on domestic bourses. Besides, Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 6.53 crore on September 19, 2014 also put some pressure.

The market is likely to remain volatile during the week as traders roll over positions in the futures & options (F&O) segment from the near month September 2014 series to October 2014 series. The near-month September 2014 F&O contracts expire on September 25, 2014. 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 8200 and 8250 Calls witnessed addition of 2.36 and 2.38 lakh shares, respectively. The 8150 and 8100 Put strikes saw addition of 10.95 and 8.66 lakh shares, respectively.

The top gainers from the F&O segment were JP Associat, Tata Motors and ONGC. The top losers were SKS Microfinance, DLF and Unitech. Moreover, India VIX - the gauge of underlying volatility in the market – has declined as traders turned cautious ahead of the F&O expiry this week.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.71% and reached 11.56. The 50-share CNX Nifty increased by 24.85 points or 0.31% to settle at 8,146.30. Nifty September 2014 futures closed at 8158.45 on Monday at a premium of 12.15 points over spot closing of 8,146.30, while Nifty October 2014 futures ended at 8214.85 at a premium of 68.55 points over spot closing. Nifty September futures saw contraction of 1.65 million (mn) units, taking the total outstanding open interest (OI) to 11.09 mn units. The near month derivatives contract will expire on September 25, 2014.

From the most active contracts, IDFC September 2014 futures traded at a premium of 0.35 points at 145.05 compared with spot closing of 144.70. The number of contracts traded were 20,166.

HDFC Bank September 2014 futures traded at a premium of 3.20 points at 859.10 compared with spot closing of 855.90. The number of contracts traded were 25,560.

Reliance Industries September 2014 futures traded at a premium of 5.60 points at 995.60 compared with spot closing of 990.00. The number of contracts traded were 34,444.

Tata Motors September 2014 futures traded at a premium of 0.25 points at 539.60 compared with spot closing of 539.35. The number of contracts traded were 22,165.

ITC September 2014 futures traded at a premium of 0.75 points at 371.75 compared with spot closing of 371.00. The number of contracts traded were 16,639.

Among Nifty calls, 8100 SP from the September month expiry was the most active call with a contraction of 0.25 million open interests. Among Nifty puts, 8,100 SP from the September month expiry was the most active put with an addition of 0.64 million open interests. The maximum OI outstanding for Calls was at 8200 SP (7.75 mn) and that for Puts was at 8,000 SP (8.26 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8182.53 --- Pivot Point 8123.67 --- Support --- 8087.43.

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 (3.03), Dr. Reddy's Laboratories (1.94), Kotak Bank (1.73), Maruti Suzuki (1.58) and Hero MotoCorp (1.30). 

Among most active underlying, State Bank of India witnessed a contraction of 0.63 million of Open Interest in the September month futures contract, followed by Tata Motors witnessing a contraction of 3.13 million of Open Interest in the September month contract; while HDFC Bank witnessed a contraction of 8.49 million of Open Interest in the September month futures contract, Infosys witnessed a contraction 0.65 million of Open Interest in the September month contract and Reliance Industries witnessed a contraction of 4.43 million of Open Interest in the September month's future contract.