Nifty witnesses smart pull back; recaptures 8,200 mark

After witnessing drubbing in last session, domestic index, Nifty heaved a sigh of relief, settling with gains of over half a percent on Tuesday on fresh buying by funds and retail investors ahead of Consumer Price Index (CPI) data which is expected to cool down for the month of November, as the data accommodates the impact of the government’s decision to demonetise high value currency notes that month. The all-India general CPI inflation had dropped to 4.2% in October from 4.39% in the previous month. Investors got some comfort with Central Board of Direct Taxes (CBDT) clarification that an increase in turnover of a business owing to its accepting digital means of payment will not trigger reopening of cases of past years. Investors were also eyeing the US Federal Reserve's meeting that begins later in the day for clues on the outlook for US monetary policy.

Traders were seen piling up positions in Auto, IT and Oil & Gas stocks, while selling was witnessed in Realty, Metal and Power sector stocks. The top gainers from the F&O segment were MindTree, Karnataka Bank and TVS Motor Company. On the other hand, the top losers were UltraTech Cement, Hindalco Industries and Zee Entertainment Enterprises. In the index option segment, maximum OI continues to be seen in the 8200-8500 calls and 7800-8200 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 1.66% and reached 15.92. The 50-share Nifty was up by 51 points or 0.62% to settle at 8,221.80.

Nifty December 2016 futures closed at 8227.45 on Tuesday at a premium of 5.65 points over spot closing of 8,221.80, while Nifty January 2017 futures ended at 8263.40 at a premium of 41.60 points over spot closing. Nifty December futures saw an addition of 0.45 million (mn) units, taking the total outstanding open interest (OI) to 16.96 million (mn) units. The near month derivatives contract will expire on December 29, 2016.

From the most active contracts, State Bank of India December 2016 futures traded at a premium of 0.25 points at 266.30 compared with spot closing of 266.05. The numbers of contracts traded were 10,072.

Vedanta December 2016 futures traded at a discount of 0.90 points at 239.00 compared with spot closing of 239.90. The numbers of contracts traded were 7,986.

Hindalco Industries 2016 futures traded at a discount of 0.05 points at 177.20 compared with spot closing of 177.25. The numbers of contracts traded were 7,671.

Axis Bank December 2016 futures traded at a discount of 0.30 points at 453.20 compared with spot closing of 453.50. The numbers of contracts traded were 9,822.

Sun Pharmaceuticals Industries December 2016 futures traded at a premium of 0.85 points at 684.55 compared with spot closing of 683.70. The numbers of contracts traded were 13,614.

Among Nifty calls, 8300 SP from the December month expiry was the most active call with a contraction of 0.03 million open interests. Among Nifty puts, 8200 SP from the December month expiry was the most active put with an addition of 0.15 million open interests. The maximum OI outstanding for Calls was at 8300 SP (5.15 mn) and that for Puts was at 8000 SP (7.86 mn). The respective Support and Resistance levels of Nifty are: Resistance 8248.50--- Pivot Point 8202.15--- Support --- 8175.45.             

The Nifty Put Call Ratio (PCR) finally stood at 1.21 for December month contract. The top five scrips with highest PCR on OI were Godrej Consumer Products (14), Colgate-Palmolive (India) (2.52), Marico (1.89), Hero MotoCorp (1.63) and Apollo Hospitals Enterprise (1.53).   

Among most active underlying, Tata Motors witnessed a contraction of 1.55 million of Open Interest in the December month futures contract, followed by Vedanta witnessing a contraction of 4.17 million of Open Interest in the December month contract, Yes Bank witnessed an addition of 0.20 million of Open Interest in the December month contract, State Bank of India witnessed an addition of 0.63 million of Open Interest in the December month contract and Tata Steel witnessed an addition of 0.25 million units of Open Interest in the November month's future contract.