Subdued global cues drag Nifty below 7,800 mark

Concerns over China's stock market crisis, profit bookings and the upcoming derivatives expiry flared up volatility in the Indian equity market - leading the local benchmark, Nifty to close with cut of 88 points or 1.13 percent on Wednesday's trade. Besides, traders were seen squaring off positions ahead of the August F&O expiry tomorrow. On the global front, Asian markets ended mostly in green, while China’s stock market has fallen again, for the fifth day running, as investors feared fresh rate cuts in China may not be enough to stabilise its slowing economy or halt a stocks collapse that is wreaking havoc in global markets. Further, European stock markets, which had surged on Tuesday after China’s moves, reopened 2 percent down as the jittery mood returned and sent investors back into safe-haven German and US government bonds.

Back home, the Indian equity market made a dismal start following weakness in US markets as investors remained wary of the Chinese economic growth slowdown. However, in late morning trade session, the index pared all its losses and entered into positive territory on selective buying by funds and investors in stocks available at attractive levels. Sentiments got some support with the reports that the government is considering reconvening Parliament to make another attempt to pass the Goods and National Sales Tax (GST). Traders also drew some comfort with the global rating agency Moody’s latest report that it will upgrade India's rating if the government is able to push through reforms, inflation stabilises, regulatory environment improves and infrastructure investment rises. The key index suffered a setback in afternoon trades and slipped into negative territory as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Investors remained concerned that foreign investors could pull out funds from emerging markets as China’s markets fell further. Foreign institutional investors were net sellers in equities to the tune of Rs 2,080 crore on August 25, 2015. Depreciation in Indian rupee too dampened the sentiments. The rupee depreciated by 4 paise to 66.14 against the US dollar at the time of equity market closing due to fresh dollar demand from importers. Traders were seen piling position in Power, Metal and Infrastructure stocks while selling was witnessed in Banking, Teck and Oil & Gas sector stocks. Eventually, Nifty ended the session below its crucial 7,800 mark with a cut of over one percent.

The top gainers from the F&O segment were Reliance Infrastructure, Indiabulls Real Estate and PTC India. On the other hand, the top losers were Bharat Forge, Tata Chemicals and Godrej Industries. In the index options segment, maximum OI was being seen in the 8100-7800 calls and 7600-7900 puts. In today's session, while the traders preferred to exit 8300 put, heavy buildup was seen in the 7800 put. On the other hand, traders exited from 8500 Call, while 8000 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility declined by 4.96% and reached 5.01. The 50-share CNX Nifty was down by 88.85 points or 1.13% to settle at 7,791.85. Nifty August 2015 futures closed at 7800.70 on Wednesday at a premium of 8.85 points over spot closing of 7,791.85, while Nifty September 2015 futures ended at 7829.20 at a premium of 37.75 points over spot closing. Nifty August futures saw contraction of 1.93 million (mn) units, taking the total outstanding open interest (OI) to 11.49 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 0.25 points at 246.00 compared with spot closing of 245.75. The number of contracts traded were 34,259.

Tata Motors August 2015 futures traded at a premium of 0.85 points at 332.25 compared with spot closing of 331.40. The number of contracts traded were 48,576.

Reliance August 2015 futures traded at a premium of 1.60 points at 853.40 compared with spot closing of 851.80. The number of contracts traded were 48,348.

HDFC Bank August 2015 futures traded at a premium of 3.25 points at 1015.75 compared with spot closing of 1,012.50. The number of contracts traded were 33,361.

Yes Bank August 2015 futures traded at a premium of 1.00 points at 681.00 compared with spot closing of 680.00. The number of contracts traded were 37,779.

Among Nifty calls, 7900 SP from the August month expiry was the most active call with an addition of 0.77 million open interests.  Among Nifty puts, 7800 SP from the August month expiry was the most active put with an addition of 0.49 million open interests. The maximum OI outstanding for Calls was at 8000 SP (4.52 mn) and that for Puts was at 7800 SP (3.52 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7888.90 --- Pivot Point 7833.00 --- Support --- 7735.95.

The Nifty Put Call Ratio (PCR) finally stood at 0.61 for August month contract.  The top five scrips with highest PCR on OI were Bosch (7), Oracle Financial Services Software (3), Dr. Reddys Laboratories (1.16), Indiabulls Housing Finance (1) and Tech Mahindra (0.93). 

Among most active underlying, State Bank of India witnessed a contraction of 9.04 million of Open Interest in the August month futures contract, followed by Reliance Industries witnessing a contraction of 6.19 million of Open Interest in the August month contract; Maruti Suzuki India witnessed a contraction of 0.55 million of Open Interest in the August month contract, Infosys witnessed a contraction of 2.26 million of Open Interest in the August month contract and Ashok Leyland witnessed a contraction of 28.17 million units of Open Interest in the August month's future contract.