Nifty reclaims 8,750 mark as RBI cuts repo rate by 25 bps

The local benchmark -- Nifty -- traded in green throughout the day and ended the session with a gain of over one third of a percent after the Reserve Bank of India (RBI) cut the short-term lending rate or repo rate, by 25 basis points to 6.25% from 6.50% earlier. After a positive start, market traded range bound in early deal, as sentiment remained upbeat after World Bank stated that India’s GDP growth will remain strong at 7.6 per cent in 2016 and 7.7 per cent in 2017. Some support also came with global ratings agency, CRISIL predicting a strong boost to India’s domestic consumption in 2016-17 led by implementation of 7th pay panel’s recommendations, with reforms like the Goods and Services Tax (GST) to benefit the uptick. However, market pared some of its gains in second half, but market managed to keep the head above water and ended the session recapturing its crucial 8,750 level.

On the global front, European stocks advanced across industry groups and regional markets, heading for a sixth straight day without losses. Asian markets ended higher on Tuesday, led by Japanese benchmark -- Nikkei -- which gained around a percent, boosted by a weaker yen against the dollar as the market’s appetite for risk returned. Sentiments got some support with data showing expansion in US manufacturing boosted optimism over the health of the world's largest economy.

The top gainers from the F&O segment were Union Bank of India, United Breweries and Jindal Steel & Power. On the other hand, the top losers were Ajanta Pharma, Zee Entertainment Enterprises and Ashok Leyland. 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 4.02% and reached 14.99. The 50-share Nifty was up by 13.05 points or 0.36% to settle at 8,769.15

Nifty October 2016 futures closed at 8799.70 on Tuesday at a premium of 30.55 points over spot closing of 8,769.15, while Nifty November 2016 futures ended at 8842.80 at a premium of 73.65 points over spot closing. Nifty September futures saw addition of 0.20 million (mn) units, taking the total outstanding open interest (OI) to 22.19 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 0.30 points at 261.30 compared with spot closing of 261.00. The numbers of contracts traded were 22,740.

ICICI Bank October 2016 futures traded at a premium of 0.70 points at 259.00 compared with spot closing of 258.30. The numbers of contracts traded were 12,130.

Punjab National Bank October 2016 futures traded at a premium of 0.25 points at 146.75 compared with spot closing of 146.50. The numbers of contracts traded were 14,211.

Bank of Baroda October 2016 futures traded at a premium of 0.40 points at 171.10 compared with spot closing of 170.70. The numbers of contracts traded were 12,507.   

Vedanta October 2016 futures traded at a premium of 0.95 points at 188.20 compared with spot closing of 187.25. The numbers of contracts traded were 12,305.   

Among Nifty calls, 8900 SP from the October month expiry was the most active call with a contraction of 0.10 million open interests. Among Nifty puts, 8700 SP from the October month expiry was the most active put with an addition of 0.67 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.68 mn) and that for Puts was at 8600 SP (4.24 mn). The respective Support and Resistance levels of Nifty are: Resistance 8789.83--- Pivot Point 8762.97--- Support --- 8742.28.             

The Nifty Put Call Ratio (PCR) finally stood at 1.02 for October month contract. The top five scrips with highest PCR on OI were MRF (8.00), OFSS (2.00), APOLLOHOSP (1.79), ABIRLANUVO (1.57) and M&M (1.24).   

Among most active underlying SBI witnessed an addition of 2.97 million of Open Interest in the October month futures contract, followed Tata Steel witnessing an addition of 0.39 million of Open Interest in the October month contract, Vedanta witnessed a addition  of 3.28 million of Open Interest in the October month contract, Yes Bank witnessed an contraction  of 0.16 million of Open Interest in the October month contract and PNB witnessed an addition  of 1.28 million units of Open Interest in the October month's future contract.