Nifty settles above 8700 level ahead of the RBI monetary policy review

The Indian benchmark index -- Nifty-- traded jubilantly on Monday and finished the session with a gain of almost one and half percent, as expectations of a rate cut by the central bank lifted lenders. Sentiment remained upbeat with India’s core sector output rising to 3.2% in August on the back of sharp rise in steel production and a pickup in cement, suggesting a lift in infrastructure and construction activity. Steel production rose 17% to a 37-month high, aided by the low base of last year. Market extended its gains in second half to end near day’s high with a gain of over 120 points, as traders took some encouragement with credit rating agency Crisil’s report that India's gross domestic product (GDP) is likely to grow at 7.9 per cent and agriculture to grow above trend at 4 per cent. The country’s GDP will be supported by a boost from consumption especially in the hinterland after a well distributed monsoon this year. Some support also came with report that foreign investors pumped in more than Rs 20,000 crore into the capital market in September, making it the highest net inflow in 11 months.

On the global front, European markets were trading higher with energy shares, among those advancing as trading got underway for the fourth quarter. Asian markets ended mostly in green on Monday, as investors weighed the prospects of a further US interest rate hike and a report on business sentiment out of Japan.

The top gainers from the F&O segment were Hindustan Zinc, Reliance Infrastructure and SRF. On the other hand, the top losers were United Spirits, IDFC Bank and TCS. In the index options segment, maximum OI was being seen in the 8700-9000 calls and 8600-8800 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 9.08% and reached 15.62. The 50-share Nifty was up by 126.95 points or 1.47% to settle at 8,738.10

Nifty October 2016 futures closed at 8779.10 on Monday at a premium of 41 points over spot closing of 8,738.10, while Nifty November 2016 futures ended at 8819.40 at a premium of 81.30 points over spot closing. Nifty September futures saw contraction of 0.83 million (mn) units, taking the total outstanding open interest (OI) to 21.99 million (mn) units. The near month derivatives contract will expire on October 27, 2016.

From the most active contracts, State Bank of India October 2016 futures traded at a premium of 1.75 points at 256.85 compared with spot closing of 255.10. The numbers of contracts traded were 10,462.

ICICI Bank October 2016 futures traded at a premium of 0.60 points at 257.05 compared with spot closing of 256.45. The numbers of contracts traded were 15,448.

Axis Bank October 2016 futures traded at a premium of 2.65 points at 552.65 compared with spot closing of 550.00. The numbers of contracts traded were 11,898.

Sun Pharmaceuticals October 2016 futures traded at a premium of 3.90 points at 762.10 compared with spot closing of 758.20. The numbers of contracts traded were 9,342.   

Tata Steel October 2016 futures traded at a premium of 2.15 points at 385.35 compared with spot closing of 383.20. The numbers of contracts traded were 9,179.    Among Nifty calls, 8800 SP from the October month expiry was the most active call with a addition of 0.23 million open interests. Among Nifty puts, 8600 SP from the October month expiry was the most active put with an addition of 1.17 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.40 mn) and that for Puts was at 8600 SP (4.12 mn). The respective Support and Resistance levels of Nifty are: Resistance 8777.20--- Pivot Point 8706.10--- Support --- 8667.00.             

The Nifty Put Call Ratio (PCR) finally stood at 0.98 for October month contract. The top five scrips with highest PCR on OI were MRF (8.00), OFSS (2.00), APOLLOHOSP (1.75), ABIRLANUVO (1.58) and M&M (1.35).   

Among most active underlying Reliance Infrastructure witnessed an addition of 0.14 million of Open Interest in the October month futures contract, followed Maruti Suzuki India witnessing an addition of 0.03 million of Open Interest in the October month contract, Reliance Industries witnessed a addition  of 0.78 million of Open Interest in the October month contract, ICICI Bank witnessed an addition  of 3.09 million of Open Interest in the October month contract and Yes Bank witnessed an contraction  of 0.03 million units of Open Interest in the October month's future contract.