Nifty stages smart recovery; ends marginally above previous day’s close

After witnessing drubbing in previous session, domestic index Nifty heaved a sigh of relief garnering a marginal gain in Monday’s trade on account of some lower level buying due to recovery in European stocks as well as US index futures. European stock markets turned positive, recovering from earlier losses, with better-than-expected Chinese trade data lifting mining shares. Back home, some support also came after RBI Governor Raghuram Rajan exuded optimism that the country will be solidly in the 5% growth bracket during the course of this fiscal and accelerate further in the next financial year. Besides, expectation of favourable Consumer Price Index (CPI) data, which will be announced later in the day, also supported the upside. CPI inflation is expected to ease to 7.2 per cent for September as compared to 7.8 per cent reported in the month of August, helped by lower food and fuel costs. However, gains remained capped on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 720 crore on October 10, 2014. Furthermore, weak IIP data for the month of August came in substantially below expectation at a mere 0.4% also weighed on market sentiment. Traders were seen piling positions in Metal, Banking and information technology (IT) while selling was witnessed in Realty, FMCG and Capital Goods sector stocks.

After gap down opening, nifty slowly and steadily started its upward journey, but it failed to breach its crucial 7,900 mark and completed its session with gains of over three tens of present. For near term, the market will closely watch Reliance Industries' second quarter earnings and September CPI inflation data that will be announced in evening today.

The top gainers from the F&O segment were The Federal Bank, Voltas and Motherson Sumi Systems. On the other hand, the top losers were Unitech, M&M and DLF. In the index option segment, maximum OI continues to be seen in the 8200-8100 calls and 7800-7700 puts indicating this is the trading range expectation. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session as overseas investors bought a net $362 million of Nifty options on October 10, 2014. That’s the biggest sale since 8 August and the second-biggest since 3 September last year.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.19% and reached 14.50. The 50-share CNX Nifty increased by 24.30 points or 0.31% to settle at 7,884.25. Nifty October 2014 futures closed at 7911.40 on Monday at a premium of 27.15 points over spot closing of 7,884.25, while Nifty November 2014 futures ended at 7961.35 at a premium of 77.10 points over spot closing. Nifty October futures saw contraction of 0.60 million (mn) units, taking the total outstanding open interest (OI) to 14.82 mn units. The near month derivatives contract will expire on October 30, 2014.

From the most active contracts, Reliance Industries October 2014 futures traded at a premium of 3.25 points at 961.35 compared with spot closing of 958.10. The number of contracts traded were 24,127.

DLF October 2014 futures traded at a premium of 0.20 points at 147.45 compared with spot closing of 147.25. The number of contracts traded were 10,540.

Tata Motors October 2014 futures traded at a premium of 1.65 points at 497.75 compared with spot closing of 496.10. The number of contracts traded were 12,067.

Tata Steel October 2014 futures traded at a premium of 3.05 points at 460.05 compared with spot closing of 457.00. The number of contracts traded were 12,682.

Larsen & Toubro October 2014 futures traded at a premium of 8.35 points at 1454.35 compared with spot closing of 1446.00. The number of contracts traded were 11,733.

Among Nifty calls, 8000 SP from the October month expiry was the most active call with an addition of 0.23 million open interests. Among Nifty puts, 7,800 SP from the October month expiry was the most active put with an addition of 0.76 million open interests. The maximum OI outstanding for Calls was at 8200 SP (6.02 mn) and that for Puts was at 7,800 SP (6.71 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7924.93--- Pivot Point 7860.47--- Support --- 7819.78.

The Nifty Put Call Ratio (PCR) finally stood at 1.03 for October month contract. The top five scrips with highest PCR on OI were Bajaj-Auto (1.09), Infosys (0.90), Kotak Bank (0.86), PNB (0.86) and Canara Bank (0.76). 

Among most active underlying, Infosys witnessed a contraction of 0.24 million of Open Interest in the October month futures contract, followed by Reliance Industries witnessing a contraction of 0.34 million of Open Interest in the October  month contract; while State Bank of India witnessed an addition of 0.08 million of Open Interest, Tata Motors witnessed a contraction of 0.21 million of Open Interest in the October month contract and Tata Steel witnessed a contraction of 0.86 million of Open Interest in the October month's future contract.