Nifty hits 14-month low to end below 7600 mark

Indian equity benchmark Nifty commenced the fresh week on a depressing note as the index extended previous week’s sell-off and sank by over a percent to the lowest level in about 14 months. The prevailing gloomy mood was further precipitated by a Chinese equity markets fall while fresh monsoon deficiency woes coupled with rupee hitting two-year lows triggered wide-spread selling. On the global front, Asian markets closed mostly in red on Monday with China stocks ending lower after China revised its annual economic growth rate in 2014 to 7.3 per cent from the previously released figure of 7.4 per cent. The downward revision mainly came from the service industry, whose growth was lowered to 7.8 percent growth from the previously announced 8.1 percent. However, European stocks rose in early trade, led by a surge in mining and commodities giant Glencore after it pledged to slash its debt by a third.

After getting a cautious start, Nifty showed some strength in early morning trades, but the sentiments turned pessimistic in late morning trade, tracking weak cues from Wall Street and a subdued trend across the Asia-Pacific region. Though, market traded near its neutral line till first half but witnessed bloodbath in second half and ended below its crucial 7,600 level as intense selling remained unabated on global growth worries. Weakness in the rupee, persistent selling by foreign institutional investors at higher levels, weak monsoon forecast and growth concerns from China continued to rattle investors’ sentiment. Besides, investors continued to remain on their toes on the back of mixed US jobs data which failed to give clarification regarding the Fed rate hike. High interest rates in the US are expected to lead away the foreign portfolio investors (FPIs) from emerging markets like India.  In addition to last month's record net outflow of over Rs 17,000 crore from domestic equities, foreign institutional investors (FFIS) offloaded shares worth Rs 4,385 crore last week, indicating more pain for the market in the near term. The rate hike is also expected to dent business margins as access to capital from the US will become expensive. Meanwhile, market witnessed broad-based selling pressure with most of the sectoral indices suffering cuts of over a percent on the NSE, led by Metal, banking and Pharma stocks who suffered the most. Banking stocks fell after a credit rating agency said in a research note that the Reserve Bank of India’s (RBI) draft guidelines on computation of base rate, if implemented in its current form, will adversely impact profitability of Indian banks. The telecom stocks too remained under pressure on reports that Department of Telecom may go slow for auction of spectrum next year if operators do not invest in infrastructure to make optimum use of available airwaves and improve quality of services. 

The top gainers from the F&O segment were PTC India, South Indian Bank and Reliance Capital. On the other hand, the top losers were Amtek Auto, Strides Arcolab and Wockhardt. In the index options segment, maximum OI was being seen in the 8200-8500 calls and 7800-8000 puts. In today's session, while the traders preferred to exit 7800 put, heavy buildup was seen in the 7500 put. On the other hand, traders exited from 8000 Call, while 7600 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 0.27% and reached 26.35. The 50-share CNX Nifty was down by 96.25 points or 1.26% to settle at 7,558.80. Nifty September 2015 futures closed at 7574.50 on Monday at a premium of 15.70 points over spot closing of 7,558.80, while Nifty October 2015 futures ended at 7612.60 at a premium of 53.80 points over spot closing. Nifty September futures saw addition of 0.37 million (mn) units, taking the total outstanding open interest (OI) to 23.57 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 0.65 points at 221.75 compared with spot closing of 221.10. The number of contracts traded were 27,297.

ICICI Bank September 2015 futures traded at a premium of 1.25 points at 250.25 compared with spot closing of 249.00. The number of contracts traded were 24,473.

Tata Motors September 2015 futures traded at a discount of 2.20 points at 321.80 compared with spot closing of 324.00. The number of contracts traded were 16,053.

Reliance September 2015 futures traded at a premium of 0.15 points at 835.20compared with spot closing of 835.05. The number of contracts traded were 13,154.

Axis Bank September 2015 futures traded at a premium of 0.60 points at 452.10 compared with spot closing of 451.50. The number of contracts traded were 25,302.

Among Nifty calls, 8000 SP from the September month expiry was the most active call with a contraction of 0.12 million open interests.  Among Nifty puts, 7500 SP from the September month expiry was the most active put with an addition of 0.29 million open interests. The maximum OI outstanding for Calls was at 8200 SP (4.38 mn) and that for Puts was at 7500 SP (4.80 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7660.60 --- Pivot Point 7603.25 --- Support --- 7501.45.

The Nifty Put Call Ratio (PCR) finally stood at 1.01 for September month contract.  The top five scrips with highest PCR on OI were Indraprastha Gas (1.77), JSW Steel (1.34), Bajaj Finance (1.17), Ultratech Cement (1.06) and Wipro (0.96).   

Among most active underlying, State Bank of India witnessed a contraction of 0.09 million of Open Interest in the September month futures contract, followed by ICICI Bank witnessing an addition of 3.18 million of Open Interest in the September month contract; Axis Bank witnessed an addition of 0.75 million of Open Interest in the September month contract, Ashok Leyland witnessed a contraction of 0.80 million of Open Interest in the September month contract and Maruti Suzuki India witnessed an addition of 0.05 million units of Open Interest in the September month's future contract.