Nifty witnesses triple digit rally supported by rate sensitive stocks

After displaying a consolidated performance in last session, Indian benchmark Nifty has managed to pull through a scintillating performance by vivaciously rallying about two percentage points on Friday, thanks to the hefty short covering in the beaten down and rate sensitive counters.  Sentiments got a boost on expectations of a rate cut by the Reserve Bank of India, a glimmer of hope on the GST front and return of stability in the Chinese currency markets. On the global front, Asian markets closed mixed, while Shanghai’s benchmark edged up as investors turned bullish after concerns about the yuan’s depreciation eased. Further, the European stocks edged higher in early trade, buoyed by auto and travel stocks, although they remained on course for a weekly decline after China moved to weaken its currency.

Back home, after getting a gap up start, Indian equity benchmark nifty slowly but steadily started gathering steam and surged by around one and half a percent by early afternoon trades. Sentiments remained up-beat on hopes of a possible rate cut by the Reserve Bank of India after data released on Friday, showed wholesale price index (WPI) for July 2015, slipped further into negative terrain and stood at -4.05 per cent as compared to -2.4 per cent in June 2015. Besides, falling global crude oil prices, which slid to its lowest level in over six years, too lifted sentiment. The key index further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. Some support also came with the recovery in rupee which has been falling sharply tracking the devaluation of yuan. The rupee was at 64.97 per dollar at the time of equity markets closing as compared to 65.09 per dollar level on Thursday. The northbound journey concluded with the close of the session helping the key index in recovering the ground lost in the week gone by. Eventually, Nifty finished the session near its intraday high and above its crucial 8,500 mark with a gain of over 160 points supported by index heavyweights viz, Punjab National Bank, ZEEL, Yes Bank and SBI.

The top gainers from the F&O segment were DLF, Housing Development and Infrastructure and Punjab National Bank. On the other hand, the top losers were Kaveri Seed Company, Britannia Industries and Ajanta Pharma. In the index options segment, maximum OI was being seen in the 8600-8800 calls and 8200-8400 puts. In today's session, while the traders preferred to exit 8100 put, heavy buildup was seen in the 8500 put. On the other hand, traders exited from 8400 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 5.86% and reached 16.02. The 50-share CNX Nifty was up by 162.70 points or 1.95% to settle at 8,518.55. Nifty August 2015 futures closed at 8542.70 on Friday at a premium of 24.15 points over spot closing of 8,518.55, while Nifty September 2015 futures ended at 8580.35 at a premium of 63.80 points over spot closing. Nifty August futures saw contraction of 0.63 million (mn) units, taking the total outstanding open interest (OI) to 15.05 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 premium of 0.65 points at 269.15 compared with spot closing of 268.50. The number of contracts traded were 34,760.

ICICI Bank August 2015 futures traded at a premium of 0.90 points at 303.70 compared with spot closing of 302.80. The number of contracts traded were 21,812.

Tata Motors August 2015 futures traded at a premium of 0.95 points at 356.00 compared with spot closing of 355.05. The number of contracts traded were 24,838.

DLF August 2015 futures traded at a discount of 1.95 points at 133.35 compared with spot closing of 135.30. The number of contracts traded were 33,633.

Reliance August 2015 futures traded at a premium of 2.25 points at 968.70 compared with spot closing of 966.45. The number of contracts traded were 31,070.

Among Nifty calls, 8600 SP from the August month expiry was the most active call with a contraction of 0.31 million open interests.  Among Nifty puts, 8400 SP from the August month expiry was the most active put with an addition of 1.01 million open interests. The maximum OI outstanding for Calls was at 8700 SP (4.96 mn) and that for Puts was at 8200 SP (6.60 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8572.03--- Pivot Point 8476.62--- Support --- 8423.13.

The Nifty Put Call Ratio (PCR) finally stood at 1.12 for August month contract.  The top five scrips with highest PCR on OI were Bosch (4), Dr. Reddys Laboratories (1.89), Maruti Suzuki India (1.65), DLF (1.50) and TCS (1.34). 

Among most active underlying, State Bank of India witnessed a contraction of 0.73 million of Open Interest in the August month futures contract, followed by Reliance Industries  witnessing a contraction of 0.92 million of Open Interest in the August month contract; DLF witnessed an addition of 8.46 million of Open Interest in the August month contract, Axis Bank witnessed an addition of 0.05 million of Open Interest in the August month contract and Maruti Suzuki India witnessed an addition of 0.02 million units of Open Interest in the August month's future contract.