Nifty tumbles below 7800 mark ahead of RBI meet

The fifty stock index -- Nifty -- capitulated by about a percent on Monday, after showing signs of consolidation in early sessions, as investors chose to avoid risky bets a day ahead of the central bank's policy meet. Sentiments remained down-beat on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 115.10 crore on September 24, 2015. On the global front, Asian markets ended mostly weak, with Japan's Nikkei down falling 1.3 per cent while China's Shanghai Composite gained moderately. European stock markets kicked off the week in negative territory on Monday, with trading sentiment hurt by another weak data release from China and a continued slide in car stocks.

Back home, the Indian equity market made a dismal start following weakness in global indices. Sentiments remained subdued with a survey by the Boston Consulting Group and apex industry chamber Confederation of Indian Industry stating that at present rate of government’s ambitious ‘Make in India’ initiative, its target of creating 100 million jobs and achieving 25 percent of GDP from manufacturing sector by 2022 may be difficult to meet. Investors failed to draw any sense of relief with Niti Aayog vice-chair man Arvind Panagariya’s statement that the economy is now in a much better shape than before and backs the idea of aggressive rate cuts. He said that growth rate has turned around and shows signs of acceleration. Market traded near neutral line for most part of the day’s trade, lacking any significant upside triggers as investors engaged themselves in few stocks. However, market witnessed a steep fall of about 80 points in the final hour of trade as participants remained edgy ahead of the fourth bi-monthly monetary policy review for the year 2015-16 slated tomorrow amid persistent sell-off by the foreign investors. Traders were also spooked by Europe, where stocks fell on fresh fears over miner Glencore’s ability to withstand a metals price slump and an end to deal talks between Vodafone and Liberty Global.  On the sectoral front, IT stocks came under pressure after Accenture forecast a muted 5-8 per cent revenue growth for the FY16 fiscal year, while Metal stocks witnessed selling pressure after global copper prices remained stuck near 3-month lows. After trading on firm in early trade, rate sensitive banking and auto stocks were came under pressure in final hours, as traded pared bets in these stocks ahead of the RBI event. The central bank is expected to cut its key repo rate by at least 25 basis points, but investors' focus would be squarely on the tone of RBI at a time when both the WPI and retail inflation are falling.

The top gainers from the F&O segment were PTC India, IDBI Bank and Dr. Reddy's Laboratories. On the other hand, the top losers were Tata Motors, Bharti Infratel and Sun TV Network. In the index options segment, maximum OI was being seen in the 8100-8300 calls and 7500-7800 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.75% and reached 21.66. The 50-share CNX Nifty was down by 72.80 points or 0.93% to settle at 7,795.70. Nifty October 2015 futures closed at 7825.50 on Monday at a premium of 29.80 points over spot closing of 7,795.70, while Nifty November 2015 futures ended at 7860.70 at a premium of 65.00 points over spot closing. Nifty October futures saw addition of 0.23 million (mn) units, taking the total outstanding open interest (OI) to 18.59 million (mn) units. The near month derivatives contract will expire on October 29, 2015.  

From the most active contracts, SBI Bank October 2015 futures traded at discount of 0.40 points at 240.50 compared with spot closing of 240.90. The number of contracts traded were 20,172.

Tata Motors October 2015 futures traded at a premium of 1.85 points at 286.50 compared with spot closing of 284.65. The number of contracts traded were 33,222.

Reliance October 2015 futures traded at a premium of 3.55 points at 838.55 compared with spot closing of 835.00. The number of contracts traded were 17,997.

DLF October 2015 futures traded at a discount of 0.40 points at 129.60 compared with spot closing of 130.00. The number of contracts traded were 15,644. 

Axis Bank October 2015 futures traded at a premium of 2.35 points at 509.95 compared with spot closing of 507.60. The number of contracts traded were 18,696.

Among Nifty calls, 8100 SP from the September month expiry was the most active call with an addition of 0.44 million open interests.  Among Nifty puts, 7600 SP from the September month expiry was the most active put with an addition of 0.10 million open interests. The maximum OI outstanding for Calls was at 8300 SP (3.40 mn) and that for Puts was at 7800 SP (3.58 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7863.78 --- Pivot Point 7825.87 --- Support --- 7757.78.

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 (5.76), ACC (1.51), Colgate-Palmolive (India) (1.30), SAIL (1.25) and Mahindra & Mahindra Financial Services (1.23).   

Among most active underlying, Tata Motors witnessed an addition of 1.99 million of Open Interest in the September month futures contract, followed by State Bank of India witnessing an addition of 0.42 million of Open Interest in the September month contract; Dr. Reddy's Laboratories witnessed an addition of 0.18 million of Open Interest in the September month contract, Reliance Industries witnessed an addition of 0.57 million of Open Interest in the September month contract and Infosys witnessed an addition of 0.70 million units of Open Interest in the September month's future contract.