Bullish sentiments help Nifty to reclaim crucial 8,550 mark

Sentiments remained bullish throughout the day’s trade on Wednesday on the back of firm global cues and Nifty finished the session on firm note with over half a percent gains as investors also cheered the service sector data that rebounded after two months of contraction. Some support also came 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. On the global front, Asian stock markets ended mostly higher, as stabilisation in energy prices helped offset the uninspiring lead from Wall Street. Overnight, US stocks chalked up a three-session losing streak as investors worried about an eventual hike in US interest rates, while Apple's shares hit their lowest in over six months.  Further, European stock indices rose in early trade as investors reacted to some positive earnings reports and better-than-expected manufacturing and services data for the eurozone.

Bach home, after gap up start, nifty showed some strength in early morning trades however, it failed to breach the narrow 47-point range for most part of the day, ending the session above its crucial 8,550 mark with a gain of over half a percentage point. The sentiments got a boost with the report that India's service sector output increased for the first time in six months in July. The Nikkei India Manufacturing PMI rose to 52.7 in July from 51.3 in June, logging a six-month high, indicating improvement in manufacturing business conditions of the country. Some support also came after RBI in its monetary policy review indicated that there is a possibility of further rate cuts in the coming months as it cut the consumer inflation forecast for January-March 2016 by 0.2% on the back of declining crude oil prices and a better than expected monsoon. Meanwhile, shares of sugar companies outperformed the market attracting significant buying interest amongst investors on a report that the government could make it mandatory for sugar firms to export millions of tonnes of surplus sugar to support local prices. However, banking shares eased after RBI warned banks against under-declaring NPAs and on ever-greening of accounts to prevent them from slipping into default. Traders were seen piling position in Realty, IT and TECK sector stocks, while selling was witnessed in Banking, PSU and Metal stocks.

The top gainers from the F&O segment were DLF, Bharat Forge and IRB Infrastructure Developers. On the other hand, the top losers were Apollo Tyres, Arvind and Rural Electrification Corporation. In the index options segment, maximum OI was being seen in the 8700-9000 calls and 8200-8400 puts. In today's session, while the traders preferred to exit 8300 put, heavy buildup was seen in the 8500 put. On the other hand, traders exited from 8500 Call, while 8900 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.11% and reached 14.66. The 50-share CNX Nifty was up by 51.05 points or 0.60% to settle at 8,567.95.

Nifty August 2015 futures closed at 8592.65 on Wednesday at a premium of 24.70 points over spot closing of 8,567.95, while Nifty September 2015 futures ended at 8630.80 at a premium of 62.85 points over spot closing. Nifty August futures saw addition of 0.59 million (mn) units, taking the total outstanding open interest (OI) to 16.65 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 1.30 points at 286.25 compared with spot closing of 284.95. The number of contracts traded were 21,718.

ICICI Bank August 2015 futures traded at a premium of 1.60 points at 312.85 compared with spot closing of 311.25. The number of contracts traded were 19,026.

Tata Motors August 2015 futures traded at a premium of 1.60 points at 377.60 compared with spot closing of 376.00. The number of contracts traded were 29,726.

Tata Steel August 2015 futures traded at a premium of 0.80 points at 263.10 compared with spot closing of 262.30. The number of contracts traded were 19,509.

Reliance August 2015 futures traded at a premium of 3.50 points at 991.70 compared with spot closing of 988.20. The number of contracts traded were 21,664.

Among Nifty calls, 8700 SP from the August month expiry was the most active call with an addition of 0.29 million open interests.  Among Nifty puts, 8500 SP from the August month expiry was the most active put with an addition of 0.85 million open interests. The maximum OI outstanding for Calls was at 8800 SP (4.79 mn) and that for Puts was at 8200 SP (5.14 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8591.25 --- Pivot Point 8568.55 --- Support --- 8545.25.

The Nifty Put Call Ratio (PCR) finally stood at 1.10 for August month contract.  The top five scrips with highest PCR on OI were Bosch (2.33), Dr. Reddys Laboratories (1.79), Bank of Baroda (1.41), Maruti Suzuki India (1.40) and Aditya Birla Nuvo (1.31). 

Among most active underlying, Canara Bank witnessed an addition of 0.34 million of Open Interest in the August month futures contract, followed by State Bank of India witnessing a contraction of 0.97 million of Open Interest in the August month contract; Eicher Motors witnessed a contraction of 0.02 million of Open Interest in the August month contract, Reliance Industries witnessed a contraction of 0.01 million of Open Interest in the August month contract and ICICI Bank witnessed a contraction of 0.97 million units of Open Interest in the August month's future contract.