Nifty snaps three day gaining streak; breaches 8,700 mark

Snapping its three days winning streak, Indian benchmark index --Nifty-- finished the session on negative territory on Tuesday, as investors booked profits after the central bank kept its policy interest rate steady in its bi-monthly monetary policy review. After a negative opening, market never looked confident of recovering and gradually extended its losses to end lower. Sentiment remain subdued with the outgoing Reserve Bank of India Governor Raghuram Rajan kept both interest rates and the cash reserve ratio on hold, leaving it to his successor to decide if inflation is subsiding enough after the monsoon season to make a cut. Besides, weakness in Indian rupee against the dollar too dampened sentiment. The rupee weakened by four paise to trade at 66.87 against the US dollar at the time of equity markets closing due to fresh buying of the American currency by banks and importers. However, some amount of recovery witnessed in last leg of trade which helped nifty to pare some of their losses, as some relief came with the Lok Sabha late last night unanimously passed the amendments to the GST Bill recommended by the Rajya Sabha, all 443 member present in the house voted in favour of the bill.

On global front, Asian markets ended mostly higher on Tuesday as fresh Chinese data provided signs of improving conditions for the world’s second largest economy, while European stocks rose slightly in early trade, led by buoyant energy shares. Energy stocks rose after OPEC said it would hold an informal meeting in Algeria next month -- hinting it could take action to stabilise the crude market.

Back home, in scrip specific development, telecom operator Idea Cellular tumbled over 4 percent on reporting a 74.3 percent year-on-year drop in June quarter consolidated net profit. Lupin shares declined over 4 percent despite the pharma major reported 55.12 per cent rise in consolidated net profit at Rs 882 crore for the quarter ended June 30, 2016 against Rs 568.60 crore in the corresponding quarter a year ago.

The top gainers from the F&O segment were Jain Irrigation Systems, Tata Power Company and NHPC. On the other hand, the top losers were Idea Cellular, Jet Airways (India) and Lupin. In the index options segment, maximum OI was being seen in the 8600-9000 calls and 8000-8700 puts.The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 0.34% and reached 14.53. The 50-share Nifty was down by 33.10 points or 0.38% to settle at 8,678.25

Nifty August 2016 futures closed at 8702.55 on Tuesday at a premium of 24.30 points over spot closing of 8,678.25, while Nifty September 2016 futures ended at 8751.45 at a premium of 73.20 points over spot closing. Nifty August futures saw contraction of 0.02 million (mn) units, taking the total outstanding open interest (OI) to 24.64 million (mn) units. The near month derivatives contract will expire on August 25, 2016.

From the most active contracts, ICICI Bank August 2016 futures traded at a premium of 0.80 points at 246.15 compared with spot closing of 245.35. The number of contracts traded were 11,308.

State Bank of India August 2016 futures traded at a premium of 0.50 points at 236.00 compared with spot closing of 235.50. The number of contracts traded were 21,749.   

Idea Cellular August 2016 futures traded at a premium of 0.45 points at 97.40 compared with spot closing of 96.95. The number of contracts traded were 10,043.

Adani Ports and Special Economic Zone August 2016 futures traded at a premium of 1.40 points at 240.40 compared with spot closing of 239.00. The number of contracts traded were 11,071.   

Exide Industries August 2016 futures traded at a premium of 0.80 points at 179.50 compared with spot closing of 178.70. The number of contracts traded were 13,266. 

Among Nifty calls, 8800 SP from the August month expiry was the most active call with an addition of 0.31 million open interests. Among Nifty puts, 8600 SP from the August month expiry was the most active put with an contraction of 0.27 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.85 mn) and that for Puts was at 8500 SP (5.52 mn). The respective Support and Resistance levels of Nifty are: Resistance 8725.00--- Pivot Point 8681.60--- Support --- 8634.85.             

The Nifty Put Call Ratio (PCR) finally stood at 0.95 for August month contract. The top five scrips with highest PCR on OI were BHARATFORG (1.44), GODREJIND (1.36), YESBANK (1.15), JINDALSTEL (1.15) and GRASIM (1.10).   

Among most active underlying Lupin witnessed an addition of 1.32 million of Open Interest in the August month futures contract, followed State Bank of India witnessing an addition of 2.18 million of Open Interest in the August month contract; ICICI Bank witnessed a addition of 2.29 million of Open Interest in the August month contract, Apollo Tyres witnessed an addition of 0.63 million of Open Interest in the August month contract and Axis Bank witnessed an addition of 0.24 million units of Open Interest in the August month's future contract.