Nifty ends below 7850 mark on weak global cues

After showing a firm upmove in the previous trading session, Indian equity benchmark nifty stumbled again on Tuesday, as weak Chinese markets amplified risk aversion ahead of the US Federal Reserve’s meeting on interest rates this week. Even the better-than-expected inflation and modest factory output data, which raised the hopes of a rate cut by the Reserve Bank of India, failed to support buying in the market. On the global front, Asian markets closed mostly in red on Tuesday, as investors await the outcome of a US Federal Reserve meeting. China’s stock-market turmoil, tumbling oil prices, a leadership change in Australia and the Bank of Japan’s decision to refrain from expanding stimulus, were some of loose thread of global markets. Further, losses in miners led European stocks lower amid concerns about growth prospects in China and Germany before a Federal Reserve rate decision.

Back home, after getting a weak start, Indian index Nifty showed some strength in early trades, but the sentiments turned pessimistic afterwards and index started drifting lower, as many investors were staying away from making big bets ahead of the Federal Reserve’s policy meeting this week and others were worried about weak economic data from China. An interest rate hike in the US could accelerate the selling from foreign investors in Indian stock markets. Besides, a rate hike in the US would strengthen the dollar, putting further pressure on rupee. Sentiments remained down-beat on the report that India is headed towards the driest monsoon season for the third time in three decades. Renewing concerns over poor harvest and spike in food inflation, the monsoon rainfall deficit so far has widened to 16 percent, according to the India Meteorological Department (IMD).  The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after European markets reversed their all gains and entered into negative zone. Selling in Metal counter too weighed down sentiment as China's investment and factory output in August missed forecasts, raising concerns over the growth of world’s second largest economy, China. Though the index recovered from the lows of the day but ended lower for the day. Finally, Nifty ended the session below its crucial 7,850 mark with a cut of over half percent.

The top gainers from the F&O segment were Ajanta Pharma, Mcleod Russel India and Bata India. On the other hand, the top losers were Bharat Forge, Tata Steel and Adani Enterprises. 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 7800, 7900 and 8000 Put on the back of profit booking. On the other hand, 7800, 7900 and 8100 Call strikes saw addition of 3.35, 1.88 and 5.77 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.37% and reached 23.74. The 50-share CNX Nifty was down by 43.15 points or 0.55% to settle at 7829.10. Nifty September 2015 futures closed at 7828.55 on Tuesday at a discount of 0.55 points over spot closing of 7,829.10, while Nifty October 2015 futures ended at 7866.90 at a premium of 37.80 points over spot closing. Nifty September futures saw contraction of 0.08 million (mn) units, taking the total outstanding open interest (OI) to 22.24 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 1.05 points at 233.95 compared with spot closing of 232.90. The number of contracts traded were 27,197.

ICICI Bank September 2015 futures traded at a premium of 0.75 points at 269.25 compared with spot closing of 268.50. The number of contracts traded were 20,514.

Tata Motors September 2015 futures traded at a discount of 0.40 points at 334.20 compared with spot closing of 334.35. The number of contracts traded were 19,473.

Tata Steel September 2015 futures traded at a premium of 0.75 points at 229.35 compared with spot closing of 228.60. The number of contracts traded were 22,016.

Reliance September 2015 futures traded at a premium of 1.15 points at 868.15 compared with spot closing of 867.00. The number of contracts traded were 23,386.

Among Nifty calls, 8000 SP from the September month expiry was the most active call with a contraction of 0.04 million open interests.  Among Nifty puts, 7800 SP from the September month expiry was the most active put with a contraction of 0.20 million open interests. The maximum OI outstanding for Calls was at 8000 SP (4.63 mn) and that for Puts was at 7500 SP (4.47 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7872.82 --- Pivot Point 7836.28 --- Support --- 7792.57.

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 (1.76), Wipro (1.19), CEAT (1.05), Ultratech Cement (1.01) and IndusInd Bank (0.97).   

Among most active underlying, State Bank of India witnessed a contraction of 2.18 million of Open Interest in the September month futures contract, followed by Maruti Suzuki India witnessing a contraction of 0.02 million of Open Interest in the September month contract; Tata Steel witnessed an addition of 0.73 million of Open Interest in the September month contract, Reliance Industries witnessed a contraction of 0.76 million of Open Interest in the September month contract and Larsen & Toubro witnessed an addition of 0.49 million units of Open Interest in the September month's future contract.