Nifty snaps four days winning streak

Snapping its four days winning streak, Nifty closed in the negative territory as investors chose to book profit after the Reserve Bank of India (RBI) at its third bi-monthly policy review kept key rates unchanged as retail inflation continues to remain at elevated levels. Besides, weakness among the global peers on the back of downbeat US economic data and disappointing manufacturing data from China has further hurt the sentiments. On the global front, Asian stock markets ended mostly in red, as a measure of China’s factory activity hit a two-year low and investors continue to seek clarity about Beijing’s role in rescuing the stock market. Further, European markets drifted lower in early trade, snapping a five-session winning streak, as Greece's banking stocks plunged for a second day running after resuming trading following a five-week suspension.

Back home, after getting a cautious but positive start, CNX nifty slipped into negative territory and traded blow natural line on absence of positive triggers which could take the markets higher and profit booking in frontline line blue-chip stocks ahead of the RBI monetary policy.  The key gauges made some attempts to claw back into the green zone in early afternoon trades but profit booking at higher level dragged the key index to the lowest point in the session. Sentiments remained down-beat as the RBI in its third bi-monthly monetary policy review meeting kept the repo rate unchanged at 7.25% while the cash-reserve-ratio (CRR) was also maintained at 4%. Reasoning its policy stance, the central bank said sustained hardening of inflation excluding food and fuel is most worrisome. Further, the central bank has also said government economic reforms and the timing of any increase in U.S. interest rates would be key factors that will determine whether the central bank cuts rates for a fourth time this year. Investors remained cautious on the report that Indian Meteorological Department (IMD) retained its seasonal forecast for this year's monsoon rains at 88% of the long-period average (LPA) and warned that showers in August and September will be 84% of LPA.  However, late short covering in blue-chip stocks ensured that local index go home with relatively small losses.  The losses remained capped with the report that the central bank retained its growth forecast of 7.6% for the financial year ending March 2016, citing a gradually improving outlook on the back of better real income from the decline in commodity prices and likelihood of better agricultural income if the monsoon continues to improve. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 350.41 crore on August 03, 2015. Traders were seen piling position in Metal, PSU and Auto stock, while selling was witnessed in Consumer Durables, Oil & Gas and Teck sector stocks.

The top gainers from the F&O segment were Adani Enterprises, Union Bank of India and CEAT. On the other hand, the top losers were Sun TV Network, Unitech and Idea Cellular. In the index options segment, maximum OI was being seen in the 8700-9000 calls and 8200-8400 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.63% and reached 14.83. The 50-share CNX Nifty was down by 26.15 points or 0.31% to settle at 8,516.90. Nifty August 2015 futures closed at 8547.55 on Tuesday at a premium of 30.65 points over spot closing of 8,516.90, while Nifty September 2015 futures ended at 8587.80 at a premium of 70.90 points over spot closing. Nifty August futures saw contraction of 0.79 million (mn) units, taking the total outstanding open interest (OI) to 16.05 million (mn) units. The near month derivatives contract will expire on August 27, 2015.

From the most active contracts, SBI August 2015 futures traded at discount of 0.05 points at 288.95 compared with spot closing of 289.00. The number of contracts traded were 52,353.

ICICI Bank August 2015 futures traded at a discount of 0.15 points at 315.10 compared with spot closing of 315.25. The number of contracts traded were 33,277.

Reliance August 2015 futures traded at a premium of 3.80 points at 993.15 compared with spot closing of 989.35. The number of contracts traded were 29,170.

Tata Steel August 2015 futures traded at a discount of 0.65 points at 258.15 compared with spot closing of 258.80. The number of contracts traded were 30,299.

HDFC Bank August 2015 futures traded at a premium of 8.15 points at 1094.35 compared with spot closing of 1,086.20. The number of contracts traded were 21,442.

Among Nifty calls, 8600 SP from the August month expiry was the most active call with an addition of 0.83 million open interests.  Among Nifty puts, 8500 SP from the August month expiry was the most active put with an addition of 0.37 million open interests. The maximum OI outstanding for Calls was at 8800 SP (4.59 mn) and that for Puts was at 8200 SP (4.90 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8571.95--- Pivot Point 8510.10--- Support --- 8455.05.

The Nifty Put Call Ratio (PCR) finally stood at 1.05 for August month contract.  The top five scrips with highest PCR on OI were KSCL (2.40), Bosch (2.33), Dr. Reddys Laboratories (1.81), Bank of Baroda (1.45) and Bata India (1.37). 

Among most active underlying, State Bank of India witnessed an addition of 2.53 million of Open Interest in the August month futures contract, followed by Hero MotoCorp witnessing an addition of 0.38 million of Open Interest in the August month contract; ICICI Bank witnessed an addition of 0.13 million of Open Interest in the August month contract, Reliance Industries witnessed an addition of 0.56 million of Open Interest in the August month contract and Eicher Motors witnessed an addition of 0.03 million units of Open Interest in the August month's future contract.