US rate hike worries drag Nifty below 8,550 level

The local benchmark -- Nifty -- ended the session in red on Monday. Profit booking which took place in second half of session mainly dragged the market lower. Market made a cautious start and traded in tight band near its neutral lines, as market participants remained on sidelines after lower earning guidance from IT majors i.e. TCS, Infosys and NIIT Technologies. Market started moving southward in second half of the trade, as investors remained wary about a US rate hike on horizon which made investors skittish, as a rate hike could affect liquidity flow for emerging markets. Traders failed to get any sense of relief with the Prime Minister Narendra Modi’s asserting that results of the reforms undertaken by his government were visible and the country has transformed into ‘one of the most open economies’ in the world with a strong growth rate. Also, investors shrugged of the report that India’s export during September 2016 has shown sign of revival, registering a growth of 4.62 per cent in dollar term to $22.88 billion as compared to $21.86 billion in September 2015. Finally, Nifty ended the session with a cut of around three fourth of a percent, breaching its crucial 8,550 mark.

Weakness in Global equity markets too dampened sentiments. European markets were trading in red, as investors remained cautious ahead of earnings, key data and a European Central Bank (ECB) meeting later this week. However, Asian markets ended mostly in green, while the dollar held firm near seven-month high against a basket of major currencies after comments from Federal Reserve Chair Janet Yellen boosted long-dated US bond yields.

The top gainers from the F&O segment were ICICI Bank, Indo Count Industries and DCB BANK. On the other hand, the top losers were NIIT Technologies, CEAT and Mahindra & Mahindra Financial Services. In the index options segment, maximum OI was being seen in the 8500-9000 calls and 8500-8600 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility addition by 5.16% and reached 15.65. The 50-share Nifty was down by 63 points or 0.73% to settle at 8,520.40

Nifty October 2016 futures closed at 8523.90 on Monday at a premium of 3.50 points over spot closing of 8,520.40, while Nifty November 2016 futures ended at 8562.45 at a premium of 42.05 points over spot closing. Nifty October futures saw contraction of 0.48 million (mn) units, taking the total outstanding open interest (OI) to 18.75 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 0.15 points at 253.15 compared with spot closing of 253.00. The numbers of contracts traded were 14,682.

ICICI Bank October 2016 futures traded at a premium of 0.45 points at 258.70 compared with spot closing of 259.15. The numbers of contracts traded were 44,332.

Axis Bank October 2016 futures traded at a premium of 1.00 points at 519.85 compared with spot closing of 518.85. The numbers of contracts traded were 17,116.

HDFC Bank October 2016 futures traded at a premium of 1.20 points at 1240.25 compared with spot closing of 1,239.05. The numbers of contracts traded were 11,966.   

Tata Steel October 2016 futures traded at a discount of 0.85 points at 410.85 compared with spot closing of 411.70. The numbers of contracts traded were 14,073.   

Among Nifty calls, 8600 SP from the October month expiry was the most active call with a addition of 1.46 million open interests. Among Nifty puts, 8500 SP from the October month expiry was the most active put with an contraction of 0.48 million open interests. The maximum OI outstanding for Calls was at 9000 SP (6.89 mn) and that for Puts was at 8500 SP (4.91 mn). The respective Support and Resistance levels of Nifty are: Resistance 8588.48--- Pivot Point 8547.32--- Support --- 8479.23.             

The Nifty Put Call Ratio (PCR) finally stood at 0.81 for October month contract. The top five scrips with highest PCR on OI were OFSS (2.00), APOLLOHOSP (1.86), LT (1.26), MRF (1.20) and CUMMINSIND (1.08).   

Among most active underlying ICICI Bank witnessed an contraction of 12.45 million of Open Interest in the October month futures contract, followed SBI witnessing an contraction of 3.88 million of Open Interest in the October month contract, Tata Steel witnessed a contraction of 0.88 million of Open Interest in the October month contract, DHFL witnessed an addition of 0.31 million of Open Interest in the October month contract and Infosys witnessed an contraction  of 0.38 million units of Open Interest in the October month's future contract.