Nifty reclaims 7850 mark; Metal shares shine

Hopes of a rate cut by the RBI on the back of strong macro economic data buoyed the Indian equities markets on Monday, leading to a barometer index Nifty to close with gains of over 80 points.  Some support also came with Minister of State for Finance Jayant Sinha's statement that RBI should take into account various factors, including low inflation, while deciding on monetary policy stance.  On the global front, Asian markets closed mixed on Monday, as traders digested a slew of Chinese data released over the weekend and tread cautiously ahead of the Federal Reserve's policy meeting this week. However, European counters have made a strong start and CAC, DAX and FTSE were trading with a gain of over half a percent in early deals.

Back home, the benchmark got off to a pessimistic start following the Asian peers as sentiments got pressured after China’s factory output and investment for the month of August missed the forecast, further strengthening the fears that the world’s second largest economy is heading for a cool down. However, the index erased all early losses and entered into the positive territory in late morning session on emergence of buying by funds and retail investors on the back of improved Industrial output data, which was released on Friday post market hours. The industrial output for the month of July provided a breath of fresh air coming at 4.2%, indicating that the Indian economy is on its path to revival.  Sentiments also remained up-beat after Wholesale Price Index (WPI) inflation declined to (-)4.95 per cent in August from (-)4.05 per cent in July. It was primarily on account of a sharp cooling in fuel costs. The wholesale fuel prices tumbled 16.50 per cent from a year ago, while food prices dropped 1.13 per cent year-on-year.  Some of the investors were cutting their long term and short term positions ahead of US Fed meeting also helped the market. Second half of the session saw the key index capitalize on the momentum further and spurt to session’s highest levels in dying moments. However, a mild profit booking in dying moments of trade led the key index shut shops off the intraday highs. Finally, Nifty ended the session with a gain of 82 points reclaiming 7,850 mark led by Metal stocks, which rallied on reports that the government will soon notify a 20 per cent import tax on some hot-rolled steel products.  Stron buying also witnessed in banking stocks, which surged on hopes that slowing retail inflation would provide the Reserve Bank of India (RBI) wiggle room to cut interest rates.

The top gainers from the F&O segment were Just Dial, Amtek Auto and Adani Enterprises. On the other hand, the top losers were Page Industries, Bharat Electronics and Mcleod Russel India. In the index options segment, maximum OI was being seen in the 8200-8500 calls and 7200-7500 puts. In today's session, some traders exited from 7700 and 7800 Call on the back of profit booking. On the other hand, 7600, 7700 and 7800 Put strikes saw addition of 3.35, 3.89 and 10.15 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.62% and reached 24.32. The 50-share CNX Nifty was up by 82.95 points or 1.06%to settle at 7872.25. Nifty September 2015 futures closed at 7875.20 on Monday at a premium of 2.95 points over spot closing of 7,872.25, while Nifty October 2015 futures ended at 7912.15 at a premium of 39.90 points over spot closing. Nifty September futures saw contraction of 0.34 million (mn) units, taking the total outstanding open interest (OI) to 22.32 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 0.35 points at 235.65 compared with spot closing of 235.30. The number of contracts traded were 20,711.

ICICI Bank September 2015 futures traded at a premium of 0.50 points at 272.30 compared with spot closing of 271.80. The number of contracts traded were 22,305.

Tata Steel September 2015 futures traded at a premium of 0.90 points at 241.90 compared with spot closing of 241.00. The number of contracts traded were 16,586.

Reliance September 2015 futures traded at a premium of 3.55 points at 865.55 compared with spot closing of 862.00. The number of contracts traded were 14,880.

Axis Bank September 2015 futures traded at a premium of 0.50 points at 496.45 compared with spot closing of 495.95. The number of contracts traded were 19,741.

Among Nifty calls, 8000 SP from the September month expiry was the most active call with an addition of 0.41 million open interests.  Among Nifty puts, 7700 SP from the September month expiry was the most active put with a contraction of 0.38 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.39 mn) and that for Puts was at 7500 SP (4.60 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7914.18 --- Pivot Point 7838.02 --- Support --- 7796.08.

The Nifty Put Call Ratio (PCR) finally stood at 1.07 for September month contract.  The top five scrips with highest PCR on OI were Indraprastha Gas (1.76), Wipro (1.17), Ultratech Cement (1.08), CEAT (1.07) and JSW Steel (1.02).   

Among most active underlying, State Bank of India witnessed a contraction of 0.11 million of Open Interest in the September month futures contract, followed by ICICI Bank witnessing an addition of 0.93 million of Open Interest in the September month contract; Axis Bank witnessed a contraction of 0.16 million of Open Interest in the September month contract, Tata Steel witnessed a contraction of 0.31 million of Open Interest in the September month contract and Reliance Industries witnessed an addition of 0.19 million units of Open Interest in the September month's future contract.