Nifty stage smart recovery; ends above 7,900 mark

Bulls sprung back into action on the last day of August F&O series, as a large round of short-covering fueled by an equally spectacular rally in global equity markets helped benchmark Nifty to close with a massive gains of 157 points or 2.02 percent. Sentiments were up-beat on report that the government can spend an additional Rs 37,200 crore more this fiscal year in infra investments or bank recapitalization and still not miss the 3.9% fiscal deficit target, attributing the surplus to the higher indirect tax collections, which till July rose a healthy 39% and a massive decline in crude prices. On the global front, All the Asian markets ended in green led by over 5% rise in Chinese markets after a rally on Wall Street cheered investors and eased fears of a deep and lasting global market rout. Also lifting the global market sentiment, Japan's central bank governor Haruhiko Kuroda said market players has become 'too pessimistic' about China, and he expected its growth would likely to remain at 6-7 per cent this year and next. Major European markets were trading in the positive territory, with France's CAC 40 and German DAX were up over 3 per cent each, while Britain's FTSE 100 rose over 2 percent.  

Back home, the benchmark got off to a positive start in the morning trade as investors were largely influenced by global rally with Wall Street registering its biggest one-day gain in four years on Wednesday as fears about China's economy gave way to bargain hunters emboldened by expectations the US Federal Reserve might not raise interest rates next month. Sentiments also got some support with the gains in the rupee, which has once again slipped below 66 mark against the dollar after RBI governor Raghuram Rajan said that he was not in favour of depreciating the rupee and joining a global wave of monetary measures that have weakened currencies. The bourses 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 after Minister of Urban Development Venkaiah Naidu announced the list where government plans to spend over Rs 3 lakh crore over the next 5-6 years to recast urban cities. Eventually, Nifty ended the day’s trade with a gain of over two percent recapturing its crucial 7,900 level.

The domestic index CNX Nifty finished the August F&O series with a gain of 472.85 points or 5.95%.  Many traders rolled over positions in the futures & options (F&O) segment from the August 2015 series to September 2015 series. Sectorally, infrastructure, capital goods and telecom stocks were witnessed high rollover of positions while stocks from the cement, finance and banking space were witnessed relatively low rolls into the September series. Meanwhile, the top gainers from the F&O segment were Jaiprakash Associates, Adani Enterprises and Bata India. On the other hand, the top losers were Bharat Heavy Electricals, Bajaj Auto and Tata Consultancy Services.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility declined by 13.60% and reached 22.04. The 50-share CNX Nifty was up by 157.10 points or 2.02% to settle at 7,948.95.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with an addition of 0.87 million open interests.  Among Nifty puts, 7800 SP from the September month expiry was the most active put with an addition of 1.24 million open interests. The maximum OI outstanding for Calls was at 8500 SP (2.92 mn) and that for Puts was at 8000 SP (3.83 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7987.60--- Pivot Point 7924.95--- Support --- 7886.30.

The Nifty Put Call Ratio (PCR) finally stood at 0.98 for September month contract.  The top five scrips with highest PCR on OI were Shriram Transport Finance Company (2.63), Canara Bank (1.43), Bata India (1.27), Havells (1.15) and Sun TV Network (1.14). 

Among most active underlying, Reliance Industries witnessed an addition of 9.32 million of Open Interest in the September month futures contract, followed by State Bank of India witnessing an addition of 18.57 million of Open Interest in the September month contract; HDFC Bank witnessed an addition of 6.63 million of Open Interest in the September month contract, Tata Motors witnessed an addition of 13.12 million of Open Interest in the September month contract and ICICI Bank witnessed an addition of 20.51 million units of Open Interest in the September month's future contract.