Nifty extends gain for second consecutive session

Strong growth in Chinese and US exchanges, coupled with attractive valuations, buoyed investor sentiment in Indian equity market propelling a local index nifty to end with a gains of 53 points or 0.67 percent. Sentiments got some support with Finance Minister Arun Jaitley’s statement that India, with 8-9 percent growth rate, can replace China as the driver of world economy. On the global front, Asian markets, barring Hang Seng, closed in green on Friday in the final trading day of the week as upbeat US economic growth data calmed sentiment following the hammering shares across the region took earlier in the week.  Further, European counters though made a cautious start and some of the indices in the region slipped into red, failing to hold their last session’s gains, even though Switzerland unexpectedly avoided a recession last quarter as investment and private consumption helped return the economy to growth.

Back home, after getting off to a good start in the morning frontline index nifty lost steam midway to erase most of the gain and end just over half a per cent up.  The market sentiment was supported by the prospect that a September US rate hike was unlikely, which fuelled optimism that the worse of recent market turmoil may be over. Some encouragement also came with the government’s announcement of the ambitious Smart City project, which is hoped to attract investment to boost the economy. Government has announced Rs 48,000 crore for development of 100 Smart cities out of which 98 names were declared and rest two will be nominated in due course. Further, sentiments remained up-beat on hopes that the Reserve Bank of India (RBI) will cut interest rates at its policy meeting on Sept. 29, marking a shift in expectations from earlier expectations, suddenly turned cautious, taking the profit off the table. However, weakness in the European counters in early deals seems to have weighed on the domestic market sentiments, amid the weakening rupee, which was down marginally following fresh demand for the US currency from banks and importers. Investors turned cautious after report that monsoon deficiency in the country aggravated further and reached to 12%, with parts like Marathwada region in Maharashtra witnessing 50% less rainfall. Traders were seen piling position in TECK, IT and Infrastructure stocks while selling was witnessed in Realty, Consumer Durables and Banking sector stocks.

The top gainers from the F&O segment were Vedanta, Oil & Natural Gas Corporation and Reliance Communications. On the other hand, the top losers were Indian Overseas Bank, Indiabulls Real Estate and Reliance Infrastructure. In the index options segment, maximum OI was being seen in the 8300-8500 calls and 7800-8000 puts. In today's session, while the traders preferred to exit 8200 put, heavy buildup was seen in the 7400 put. On the other hand, traders exited from 8300 Call, while 8800 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 5.84% and reached 23.33. The 50-share CNX Nifty was up by 53 points or 0.67% to settle at 8,001.95. Nifty September 2015 futures closed at 8022.70 on Friday at a premium of 20.75 points over spot closing of 8,001.95, while Nifty October 2015 futures ended at 8062.60 at a premium of 60.65 points over spot closing. Nifty September futures saw addition of 0.94 million (mn) units, taking the total outstanding open interest (OI) to 21.98 million (mn) units. The near month derivatives contract will expire on September 24, 2015. 

From the most active contracts, SBI September 2015 futures traded at premium of 1.85 points at 250.35 compared with spot closing of 248.50. The number of contracts traded were 29,253.

ICICI Bank September 2015 futures traded at a premium of 0.15 points at 284.60 compared with spot closing of 284.45. The number of contracts traded were 23,670.

Tata Motors September 2015 futures traded at a discount of 2.05 points at 338.55 compared with spot closing of 340.60. The number of contracts traded were 19,318.

Reliance September 2015 futures traded at a premium of 4.90 points at 876.00 compared with spot closing of 871.10. The number of contracts traded were 19,469.

HDFC Bank September 2015 futures traded at a premium of 3.65 points at 1031.20 compared with spot closing of 1,027.55. The number of contracts traded were 20,903.

Among Nifty calls, 8200 SP from the September month expiry was the most active call with an addition of 0.53 million open interests.  Among Nifty puts, 7900 SP from the September month expiry was the most active put with an addition of 0.30 million open interests. The maximum OI outstanding for Calls was at 8500 SP (3.43 mn) and that for Puts was at 8000 SP (4.32 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8075.28--- Pivot Point 8018.47--- Support --- 7945.13.

The Nifty Put Call Ratio (PCR) finally stood at 1.08 for September month contract.  The top five scrips with highest PCR on OI were Shriram Transport Finance Company (2.70), Canara Bank (1.21), Sun TV Network (1.16), JSW Steel (1.15) and Havells (1.11). 

Among most active underlying, State Bank of India witnessed a contraction of 0.05 million of Open Interest in the September month futures contract, followed by Axis Bank witnessing an addition of 0.42 million of Open Interest in the September month contract; ICICI Bank witnessed a contraction of 0.86 million of Open Interest in the September month contract, Yes Bank witnessed an addition of 0.54 million of Open Interest in the September month contract and Larsen & Toubro witnessed an addition of 0.03 million units of Open Interest in the September month's future contract.