Nifty showcases smart recovery; ends above 7800 mark

The fifty stock index -- Nifty -- showcased a smart recovery on Wednesday, recovering more than 120 points from its day's low, as financials, realty and select auto stocks were gaining across the exchange on hopes of a rate cut as the easing consumer price inflation data along with favourable macroeconimc numbers and advancement in monsoons has created enough room for a rate cut by the RBI in the forthcoming monetary policy. On global front, Asian stocks ended lower after a private survey showed activity in China's factory sector shrank for a seventh straight month to its weakest level in 6-1/2 years. However, European shares climbed higher on Wednesday after slumping to a one-month low in the previous session, with a recovery in crude oil prices supporting beaten-down energy companies.

Back home, after getting a weak start, Indian equity benchmark Nifty plunged to lowest point in the day as pessimistic sentiments prevailed across Asian markets. Sentiments remained subdued on the report that the Asian Development Bank (ADB) lowered its growth projections for India for 2015-16 to 7.4 per cent, from the 7.8 per cent earlier, citing weak monsoon, poor external demand and inability of the government to push reforms. Thereafter started the road to recovery for the index, which kept slowly but steadily moving towards the neutral line. Sentiment got some support with Finance Minister Arun Jaitley’s statement that we have learnt to live in the era of turmoils and the government is focussing on strengthening the country's real economy and harnessing its true growth potential of 8-9 per cent. The index further capitalized on the momentum and turned positive in afternoon trades as European counterparts opened on a firm note. Traders were seen piling position in Consumer Durables, Banking and Realty stocks while selling was witnessed in Power and Teck sector stocks.  Eventually, Nifty ended the session above its crucial 7,800 mark with gains of thirty three points.

The top gainers from the F&O segment were Jaiprakash Associates, IDBI Bank and UCO Bank. On the other hand, the top losers were JSW Steel, NMDC and Bosch. In the index options segment, maximum OI was being seen in the 7900-8200 calls and 7200-7500 puts. In today's session, some traders exited from 8100 and 8200 Call on the back of profit booking. On the other hand, 7600 and 7700 Put strikes saw addition of 8.30 and 7.86 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.68% and reached 20.68. The 50-share CNX Nifty was up by 33.95 points or 0.43% to settle at 7,845.95. Nifty September 2015 futures closed at 7855.45 on Wednesday at a premium of 9.50 points over spot closing of 7,845.95, while Nifty October 2015 futures ended at 7888.75 at a premium of 42.80 points over spot closing. Nifty September futures saw contraction of 2.41 million (mn) units, taking the total outstanding open interest (OI) to 15.34 million (mn) units. The near month derivatives contract will expire on September 24, 2015. 

From the most active contracts, ICICI Bank September 2015 futures traded at discount of 0.95 points at 273.30 compared with spot closing of 274.25. The number of contracts traded were 31,945.

SBI September 2015 futures traded at a discount of 0.05 points at 240.30 compared with spot closing of 240.35. The number of contracts traded were 38,7160.

Tata Motors September 2015 futures traded at a premium of 0.80 points at 311.00 compared with spot closing of 310.20. The number of contracts traded were 49,460.

Axis Bank September 2015 futures traded at a discount of 0.80 points at 512.55 compared with spot closing of 513.35. The number of contracts traded were 37,724. 

Reliance September 2015 futures traded at a premium of 0.60 points at 849.90 compared with spot closing of 849.30. The number of contracts traded were 39,157.

Among Nifty calls, 7900 SP from the September month expiry was the most active call with an addition of 0.51 million open interests.  Among Nifty puts, 7700 SP from the September month expiry was the most active put with an addition of 0.78 million open interests. The maximum OI outstanding for Calls was at 8000 SP (4.45 mn) and that for Puts was at 7800 SP (4.66 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7911.48 --- Pivot Point 7817.37 --- Support --- 7751.83.

The Nifty Put Call Ratio (PCR) finally stood at 1.09 for September month contract.  The top five scrips with highest PCR on OI were Indraprastha Gas (1.61), Maruti Suzuki India (1.48), IndusInd Bank (1.38), Ultratech Cement (1.23) and CEAT (1.17).   

Among most active underlying, State Bank of India witnessed a contraction of 4.28 million of Open Interest in the September month futures contract, followed by Axis Bank witnessing a contraction of 0.65 million of Open Interest in the September month contract; Maruti Suzuki India witnessed a contraction of 0.05 million of Open Interest in the September month contract, Reliance Industries witnessed a contraction of 1.38 million of Open Interest in the September month contract and ICICI Bank witnessed a contraction of 5.08 million units of Open Interest in the September month's future contract.