Late hour recovery helps Nifty to reclaim 8,600 mark

The local benchmark -- Nifty -- witnessed a recovery in last hour of trade and managed to end the session above its crucial 8,600 level. After making a positive start, Indian market slipped into red terrain and traded near its neutral line for most part of the day’s trade, as sentiments remained subdued after a private report revised upwards its India CPI forecast to 5.5% for the fiscal citing higher food prices but said the upside risks are limited due to delay in the rollout of the pay commission award. Weakness in rupee too dampened domestic sentiment. Traders also remained cautious after US Federal Reserve chair Janet Yellen on Friday post market hours indicated an interest rate hike remains on the cards for this year. Recovery in final hour of trade helped market to regain its green terrain on the back of buying in auto, capital goods and metal shares. Sentiments also turned up-beat after federation of Indian Chambers of Commerce and Industry (FICCI) in its latest quarterly report on, manufacturing outlook for the second quarter stated that India's manufacturing sector may witness higher growth during the July-September quarter due to improvement in export prospects and domestic demand. Traders also took some encouragement with reports that in order to ensure that GST is rolled out by April 1, 2017, the government is trying hard to get the winter session of Parliament advanced by a fortnight to pass the bill. Winter Session of Parliament is normally convened in the third or fourth week of November.

On global front, European markets were trading in red terrain in early deals, giving back gains seen of the previous session. Most of the Asian equity benchmarks tumbled on Monday after Federal Reserve Chair Janet Yellen indicated a US interest rate increase remains on the cards for this year.

The top gainers from the F&O segment were Mahindra & Mahindra Financial Services, Reliance Capital and Zee Entertainment Enterprises. On the other hand, the top losers were Hexaware Technologies, HCL Technologies and Indo Count Industries. In the index options segment, maximum OI was being seen in the 8600-9000 calls and 8400-8700 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 2.98% and reached 13.16. The 50-share Nifty was up by 34.90 points or 0.41% to settle at 8,607.45

Nifty September 2016 futures closed at 8649.75 on Monday at a premium of 42.30 points over spot closing of 8,607.45, while Nifty October 2016 futures ended at 8687.90 at a premium of 80.45 points over spot closing. Nifty September futures saw addition of 0.46 million (mn) units, taking the total outstanding open interest (OI) to 27.76 million (mn) units. The near month derivatives contract will expire on September 29, 2016.

From the most active contracts, State Bank of India September 2016 futures traded at a premium of 0.90 points at 250.35 compared with spot closing of 249.45. The numbers of contracts traded were 13,364.

ICICI Bank September 2016 futures traded at a premium of 1.40 points at 251.90 compared with spot closing of 250.50. The numbers of contracts traded were 11,463.

Tata Motors September 2016 futures traded at a premium of 3.65 points at 528.80 compared with spot closing of 525.15. The numbers of contracts traded were 24,345.

Axis Bank September 2016 futures traded at a premium of 0.90 points at 591.00 compared with spot closing of 590.10. The numbers of contracts traded were 12,241.   

Reliance Industries September 2016 futures traded at a premium of 2.95 points at 1062.25 compared with spot closing of 1,059.30. The numbers of contracts traded were 18,450.   

Among Nifty calls, 8700 SP from the September month expiry was the most active call with a addition of 0.14 million open interests. Among Nifty puts, 8500 SP from the September month expiry was the most active put with an addition of 1.04 million open interests. The maximum OI outstanding for Calls was at 9000 SP (4.00 mn) and that for Puts was at 8500 SP (5.90 mn). The respective Support and Resistance levels of Nifty are: Resistance 8638.38--- Pivot Point 8591.07--- Support --- 8560.13.             

The Nifty Put Call Ratio (PCR) finally stood at 1.13 for September month contract. The top five scrips with highest PCR on OI were GRASIM (1.27), M&M (1.24), APOLLOHOSP (1.13), LT (1.13) and TATAMOTORS  (1.08).   

Among most active underlying Tata Motors witnessed an addition of 3.02 million of Open Interest in the September month futures contract, followed Reliance Industries witnessing an addition of 0.14 million of Open Interest in the September month contract, Reliance Capital witnessed a addition  of 0.79 million of Open Interest in the September month contract, Indian Oil Corporation witnessed an addition  of 0.63 million of Open Interest in the September month contract and State Bank of India witnessed an addition  of 1.10 million units of Open Interest in the September month's future contract.