Profit booking in late trade drags Nifty lower

Erasing all its initial gains, Indian benchmark -- Nifty -- ended marginally in red on Tuesday. Profit booking which took place in last leg of trade mainly dragged the market below its neutral lines. After a positive start, market hold their gains and traded in a narrow range throughout the session, as investor got some support with the statement of Ravindra Dholakia, one of the three government appointees to the newly formed Monetary Policy Committee (MPC) that there will be no tug of war in the MPC. The tax department just within the week after the first meeting of the GST Council has come out with three draft rules and their formats relating to registration, invoice and payments which would be finalized by week-end. Beside, some support also came with the report that the government is working on a bouquet of reforms to play to the country's core strengths of technology, leisure travel and medical tourism.  The commerce department has circulated a cabinet note on domestic reforms to enhance earnings from services exports, detailing measures that can be implemented after due deliberations. However, traders opted to book profit at higher levels and market entered into red terrain, after WTO estimates showed that world trade will grow more slowly than expected in 2016, expanding by just 1.7%, well below the April forecast of 2.8%. The forecast for 2017 has also been revised, with trade now expected to grow between 1.8% and 3.1%, down from 3.6% previously. Trader also remained wary ahead of September series derivatives expiry and upcoming monetary policy review on October 4. Though, market trimmed some of its losses in dying hour to end marginally in red with a cut of around 20 points.

On the global front, European stocks reversed early gains to hover near one-week lows on Tuesday, as banks continued their retreat, oil prices lost steam ahead of OPEC meeting on Wednesday in Algiers. Asian stocks recouped early losses to end mixed on Tuesday, as the 90-minute U.S. presidential debate between Democrat Hillary Clinton and Republican Donald Trump over taxes, race and terror ended, with a CNN/ORC poll of viewers showing that Hillary had won the first of three debates.

The top gainers from the F&O segment were IDFC, Tata Global Beverages and Aurobindo Pharma Corporation. On the other hand, the top losers were Sintex Industries, CESC and Godrej Industries. In the index options segment, maximum OI was being seen in the 8700-9000 calls and 8500-8800 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 2.16% and reached 14.25. The 50-share Nifty was down by 16.65 points or 0.19% to settle at 8,706.40

Nifty September 2016 futures closed at 8716.55 on Tuesday at a premium of 10.15 points over spot closing of 8,706.40, while Nifty October 2016 futures ended at 8759.00 at a premium of 52.60 points over spot closing. Nifty September futures saw contraction of 4.39 million (mn) units, taking the total outstanding open interest (OI) to 20.59 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 0.70 points at 249.65 compared with spot closing of 248.95. The numbers of contracts traded were 18,731.

ICICI Bank September 2016 futures traded at a premium of 0.60 points at 260.80 compared with spot closing of 260.20. The numbers of contracts traded were 17,211.

Axis Bank September 2016 futures traded at a discount of 0.25 points at 542.50 compared with spot closing of 542.75. The numbers of contracts traded were 19,378.

Sun Pharmaceuticals September 2016 futures traded at a discount of 0.50 points at 770.15 compared with spot closing of 770.65. The numbers of contracts traded were 14,881.   

HDFC Bank September 2016 futures traded at a premium of 1.35 points at 1300.15 compared with spot closing of 1,298.80. The numbers of contracts traded were 21,231.    Among Nifty calls, 8800 SP from the September month expiry was the most active call with a addition of 0.03 million open interests. Among Nifty puts, 8700 SP from the September month expiry was the most active put with an contraction of 0.13 million open interests. The maximum OI outstanding for Calls was at 9000 SP (6.17 mn) and that for Puts was at 8500 SP (5.65 mn). The respective Support and Resistance levels of Nifty are: Resistance 8753.10--- Pivot Point 8721.80--- Support --- 8675.10.             

The Nifty Put Call Ratio (PCR) finally stood at 1.19 for September month contract. The top five scrips with highest PCR on OI were MRF (3.00), EICHERMOT (2.54), NIITTECH (1.68), MARUTI (1.51) and CEATLTD (1.18).   

Among most active underlying Reliance Industries witnessed an contraction of 4.94 million of Open Interest in the September month futures contract, followed SBI witnessing an contraction of 15.99 million of Open Interest in the September month contract, Axis Bank witnessed a contraction  of 3.91 million of Open Interest in the September month contract, Yes Bank witnessed an contraction  of 2.45 million of Open Interest in the September month contract and Tata Motors witnessed an contraction  of 2.47 million units of Open Interest in the September month's future contract.