Nifty witnesses smart pull back rally; recaptures 7,800 mark

The fifty stock index -- Nifty – ended the session on firm note on Monday, on account of buying in frontline blue chip stocks on the reports that the government would discuss a roadmap to roll out the proposed goods and services tax (GST) next month. Also, investors got some encouragement with Prime Minister Narendra Modi’s statement that FDI into India has increased by 40% since last year, showing the increasing global confidence in the country. On the global front, Asian markets ended mostly in red as investors turned cautious after suspected Islamist militants launched coordinated attacks across Paris that killed more than 130 people. Market participants were struggling with uncertain market conditions due to coming Fed rate hikes, global economic worries, falling oil prices and fears of a weakening retail sector. Further, the Japanese economy slipped into recession after government data shows the July-September GDP contracted 0.8%, also weighed on the sentiment. Meanwhile, European stocks too opened lower, riding on the emotional wave on account of terror attacks in Paris.

Back home, the benchmark Nifty opened on a weaker note, tracking heavy selling in other Asian counterparts, where sentiment remained bearish in the wake of last week’s deadly attacks in Paris and downbeat data from Japan. However, sentiments took U-turn in late morning session, when index entered into positive territory on emergence of buying by funds and retail investors in select stocks. Sentiments got a boost with finance minister Arun Jaitley’s statement that India's economy has grown faster than any other despite global economic turbulence, below par monsoons and private sector stress. Jaitley said the global economy is facing a challenging time because many areas of business and trade have been hit by lower oil, commodity and metal prices. But what is gloom for some is in some sense a boom for India. Some optimism also came from macro-economic front, were India's Wholesale Price Index (WPI) inflation contracted for the 12th straight month in October 2015 to -3.81% annually as compared to -4.54 per cent in September 2015. Build-up inflation rate in the financial year so far was 0.34% compared to a build-up rate of 1.89% in the corresponding period of the previous year. After entering into positive territory, the index continued its uptrend till late afternoon session, but some profit booking was witnessed in final hour of the trade, which dragged the index from high point of the day. However, some last minute short covering helped the index to end the session above its crucial 7,800 mark. Traders were seen piling position in Banking, Capital Goods and FMCG stocks, while selling was witnessed in IT, TECK and Consumer Durables sector stocks.

The top gainers from the F&O segment were GMR Infrastructure, Jaiprakash Associates and Century Textiles & Industries. On the other hand, the top losers were Kaveri Seed Company, Ajanta Pharma and Cadila Healthcare. In the index options segment, maximum OI was being seen in the 7900-8300 calls and 7500-7900 puts. In today's session, while the traders preferred to exit 7900 put, heavy buildup was seen in the 7500 put. On the other hand, traders exited from 7800 Call, while 7900 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.27% and reached 17.87. The 50-share Nifty was up by 44.35 points or 0.57% to settle at 7,806.60.  Nifty November 2015 futures closed at 7827.25 on Monday at a premium of 20.65 points over spot closing of 7,806.60, while Nifty December 2015 futures ended at 7870.95 at a premium of 64.35 points over spot closing. Nifty November futures saw contraction of 0.39 million (mn) units, taking the total outstanding open interest (OI) to 17.15 million (mn) units. The near month derivatives contract will expire on November 26, 2015.  

From the most active contracts, ICICI Bank November 2015 futures were trading flat compared with spot closing of 267.40. The number of contracts traded were 14,462.    

SBI Bank November 2015 futures traded at a discount of 0.10 points at 248.90 compared with spot closing of 249.00. The number of contracts traded were 18,022.       

Axis Bank November 2015 futures traded at a premium of 2.85 points at 483.55 compared with spot closing of 480.70. The number of contracts traded were 12,747.    

Tata Motors November 2015 futures traded at a premium of 0.90 points at 400.65 compared with spot closing of 399.75. The number of contracts traded were 10,200.       

Reliance November 2015 futures traded at a premium of 4.45 points at 937.45 compared with spot closing of 933.00. The number of contracts traded were 10,431.        

Among Nifty calls, 7800 SP from the November month expiry was the most active call with a contraction of 0.40 million open interests.  Among Nifty puts, 7700 SP from the November month expiry was the most active put with an addition of 0.02 million open interests. The maximum OI outstanding for Calls was at 8200 SP (7.11 mn) and that for Puts was at 7700 SP (5.86 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7858.92 --- Pivot Point 7786.53 --- Support --- 7734.22.

The Nifty Put Call Ratio (PCR) finally stood at 0.70 for November month contract.  The top five scrips with highest PCR on OI were STAR (1.86), Bank of Baroda (1.35), Hexaware (1.23), Titan Company (1.19) and Glenmark Pharmaceuticals (1.16).   

Among most active underlying, State Bank of India witnessed a contraction of 0.32 million of Open Interest in the November month futures contract, followed by Dr. Reddy's Laboratories witnessing a contraction of 0.22 million of Open Interest in the November month contract; Maruti Suzuki India witnessed a contraction of 0.06 million of Open Interest in the November month contract, Tata Motors witnessed a contraction of 0.76 million of Open Interest in the November month contract and Axis Bank witnessed an addition of 1.20 million units of Open Interest in the November month's future contract.