Nifty bounces back from 5-month lows; ends above 8000 mark

After witnessing drubbing in the previous three sessions, the local benchmark Nifty heaved a sigh of relief, settling with gains of around a percent on fresh buying by funds and retail investors ahead of monthly expiry of derivative contract on Thursday. The market may remain volatile this week, as traders may roll over positions in the F&O segment from the near month i.e. November 2016 series to next month i.e. December 2016 series. Sentiments got some support with Moody’s Investors Service in its latest report, on non-financial corporate, stating that Indian corporate sector is expected to log healthy profit growth in 2017 on the back of sustained economic growth, capacity additions and higher commodity prices. However, market participants remained cautious over concern of India’s demonetisation move, estimated to pull down gross domestic product growth this financial year from last year’s 7.6%. The domestic rating agency ICRA has forecasted a 40 bps dip in growth rate to 7.2% in the second quarter of the current fiscal, citing debilitating impact of the demonetisation drive on the economy.

Investors were seen piling position in Metal, Realty and Auto stocks, while selling was witnessed in Capital Goods and Power sector stocks. The top gainers from the F&O segment were India Cements, Hindalco Industries and United Spirits. On the other hand, the top losers were Reliance Communications, Oracle Financial Services Software and IRB Infrastructure Developers. In the index option segment, maximum OI continues to be seen in the 8000-8400 calls and 7600-8000 puts indicating this is the trading range expectation.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.31% and reached 18.46. The 50-share Nifty was up by 73.20 points or 0.92% to settle at 8,002.30.

Nifty November 2016 futures closed at 8006.80 on Tuesday at a premium of 4.5 points over spot closing of 8,002.30, while Nifty December 2016 futures ended at 8044.95 at a premium of 42.65 points over spot closing. Nifty November futures saw a contraction of 1.39 million (mn) units, taking the total outstanding open interest (OI) to 15.26 million (mn) units. The near month derivatives contract will expire on November 24, 2016.

From the most active contracts, ICICI Bank November 2016 futures traded at a discount of 0.15 points at 263.25 compared with spot closing of 263.40. The numbers of contracts traded were 15,301.

State Bank of India November 2016 futures traded at a discount of 0.25 points at 257.75 compared with spot closing of 258.00. The numbers of contracts traded were 27,225.

Hindalco Industries November 2016 futures traded at a discount of 0.65 points at 166.50 compared with spot closing of 167.15. The numbers of contracts traded were 12,820.

Axis Bank November 2016 futures traded at a discount of 3.60 points at 471.05 compared with spot closing of 474.65. The numbers of contracts traded were 15,304.

Sun Pharmaceuticals Industries November 2016 futures traded at a premium of 0.40 points at 689.65 compared with spot closing of 689.20. The numbers of contracts traded were 19,250.  

Among Nifty calls, 8000 SP from the November month expiry was the most active call with an addition of 0.09 million open interests. Among Nifty puts, 7900 SP from the November month expiry was the most active put with an addition of 0.05 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.22 mn) and that for Puts was at 8000 SP (4.39 mn). The respective Support and Resistance levels of Nifty are: Resistance 8034.85--- Pivot Point 7986.50--- Support --- 7953.95.             

The Nifty Put Call Ratio (PCR) finally stood at 0.53 for November month contract. The top five scrips with highest PCR on OI were Cummins India (1.13), BPCL (1.00), UBL (0.97), Hindustan Unilever (0.82) and Titan (0.81).   

Among most active underlying State Bank of India witnessed a contraction of 12.14 million of Open Interest in the November month futures contract, followed Vedanta witnessing a contraction of 5.88 million of Open Interest in the November month contract, Yes Bank witnessed a contraction of 1.27 million of Open Interest in the November month contract, HDFC Bank witnessed a contraction of 2.85 million of Open Interest in the November month contract and Maruti Suzuki India witnessed a contraction of 0.36 million units of Open Interest in the November month's future contract.