Nifty starts new F&O series on pessimistic note; breaches 8,650 mark

The local benchmark -- Nifty -- started the August F&O series on pessimistic note on Friday on account of profit booking, amid disappointing stimulus from the Bank of Japan. After a negative opening, market never looked confident of recovering and gradually extended its losses till end to close near intraday lows, as investors opted to remain on sidelines on concern over the crucial GST Bill. Sentiments also remained under pressure with the Credit rating agency, ICRA stating that the Reserve Bank of India (RBI) is unlikely to cut policy rates in its upcoming monetary policy review on August 9, but a 0.25 per cent cut is on cards in 2016. Traders failed to take any comfort with Finance Minister Arun Jaitley’s statement that India registered 53 per cent increase in Foreign Direct Investment (FDI) in last two years as the investment climate brightened due to steps taken to foster growth, price stability and fiscal prudence which also improved the overall macroeconomic stability. Further, Investors shrugged off India Meteorological Department’s (IMD) prediction that with reduced chances of La Nina weather event, the monsoon rainfall this year is likely to be normal and not ‘above normal’, even though monsoon rains in India were 4 percent below average in the last one week.

On global front, Asian share ended mostly lower on Friday. Hang Seng and Shanghai closed lower by 1.28 per cent and 0.50 per cent, respectively. While, European shares were mixed in early trading on Friday after a spotty day in Asia as investors were disappointed by the Bank of Japan's modest expansion of its lavish monetary stimulus.

The top gainers from the F&O segment were Dish TV India, Eicher Motors and Page Industries. On the other hand, the top losers were Jaiprakash Associates, KPIT Technologies and Hexaware Technologies. In the index options segment, maximum OI was being seen in the 8000-9000 calls and 8000-8700 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 1.52% and reached 14.91. The 50-share Nifty was down by 27.80 points or 0.32% to settle at 8,638.50.

Nifty August 2016 futures closed at 8686.60 on Friday at a premium of 48.10 points over spot closing of 8,638.50, while Nifty September 2016 futures ended at 8735.15 at a premium of 48.55 points over spot closing. Nifty August futures saw addition of 0.32 million (mn) units, taking the total outstanding open interest (OI) to 22.17 million (mn) units. The near month derivatives contract will expire on August 25, 2016. 

From the most active contracts, State Bank of India August 2016 futures traded at a discount of 1.05 points at 229.10 compared with spot closing of 230.15. The number of contracts traded were 12,893.   

ICICI Bank August 2016 futures traded at a premium of 2.30 points at 264.60 compared with spot closing of 262.30. The number of contracts traded were 18,216. 

Tata Steel of August 2016 futures traded at a premium of 2.70 points at 357.15 compared with spot closing of 354.45. The number of contracts traded were 11,457.

Reliance Capital August 2016 futures traded at a premium of 1.75 points at 448.85 compared with spot closing of 447.10. The number of contracts traded were 13,183.

Reliance Infrastructure August 2016 futures traded at a premium of 5.55 points at 610.65 compared with spot closing of 605.10. The number of contracts traded were 20,003. 

Among Nifty calls, 8800 SP from the August month expiry was the most active call with an addition of 0.28 million open interests. Among Nifty puts, 8600 SP from the August month expiry was the most active put with an addition of 0.28 million open interests. The maximum OI outstanding for Calls was at 9000 SP (4.75 mn) and that for Puts was at 8500 SP (3.90 mn). The respective Support and Resistance levels of Nifty are: Resistance 8662.18--- Pivot Point 8646.67--- Support --- 8622.98. 

The Nifty Put Call Ratio (PCR) finally stood at 0.88 for August month contract. The top five scrips with highest PCR on OI were EICHERMOT (2.45), SRF (1.90), BAJFINANCE (1.42), M&M (1.36) and MARUTI  (1.12).   

Among most active underlying ICICI Bank witnessed an addition of 3.07 million of Open Interest in the August month futures contract, followed Larsen & Toubro witnessing an addition of 0.96 million of Open Interest in the August month contract; Reliance Infrastructure witnessed a addition of 0.40 million of Open Interest in the August month contract, Maruti Suzuki India witnessed an addition of 0.04 million of Open Interest in the August month contract and UPL witnessed an addition of 0.05 million units of Open Interest in the August month's future contract.