Nifty claws back above 5850 ahead of F&O expiry tomorrow

Nifty edged lower amid choppy trade to almost 70 points below the previous close, with the market sentiment hit adversely by the government's failure to raise fuel prices. However, the index trimmed intraday losses to end above 5850 level, as the rupee edged higher against the dollar and as European stocks reversed their intraday losses too. Volatility was high ahead of the expiry of the near month futures & options (F&O) contracts tomorrow, 26 September 2013.

A bout of initial volatility was witnessed  in early trade as index alternately swung between gains and losses as investors opted to stay on the sidelines as it being a penultimate day of September F&O expiry. Though, some support came in with Union Cabinet approving a methodology for auctioning coal blocks, enabling the government to allot coal mining licences through competitive bidding for the first time. Also, RBI in its latest initiative of relaxing norms to raise funds from abroad has said that now all types of companies can avail trade credit facility from overseas for import of capital goods. Earlier, only companies in the infrastructure sector were allowed to raise such trade credits. In late morning trade, index lost ground and slipping in the negative territory as rupee continued to lose ground against the dollar ever since the RBI withdrew some of the supportive measures for the domestic currency in its policy review on Friday. The rupee was down nearly 0.16 percent against the US dollar in early trade at 62.84, 

Weakness continued on the index after hitting its lowest level in more than a week in afternoon trade weighed down by Oil marketing PSU companies after the oil minister said that the government has no proposal to hike diesel prices now. However, there was good bounce back in last hour of trade that led the index to pare most of its losses, as the rupee strengthened and the European markets too came into recovery mode. Few of the blue-chip stocks that have been underperforming since morning saw some lower level buying. The co-existing volatility kept the index upmoves in check and prevented it from a positive close. Power, capital goods, healthcare and metal were the top gaining gauges up by over a percent. Power sector got a boost with Union Cabinet approving the methodology for auctioning coal blocks, enabling the government to allot coal mining licences through competitive bidding for the first time. While, the capital Goods sector surged after RBI relaxed norms to raise funds from abroad, saying that now all types of companies can avail trade credit facility from overseas for import of capital goods.

NSE sectoral indices made a red closing. CNX Media surged by 2.60%, CNX PSU Bank up by 1.76%, CNX Infra up by 1.59%, CNX Pharma up by 1.32%and CNX Metal up by 1.12%. On the other hand, CNX FMCG down by 1.00%, CNX Finance down by 0.99%, CNX Bank down by 0.93%, CNX Energy down by 0.91%, and CNX Realty down by 0.25% were the losers on sectoral indices.

The India VIX decreased by 3.89% at 25.68 as compared to its previous close of 26.72 on Monday. The 50-share CNX Nifty lost 18.60 points or 0.32% to settle at 5,873.85.

Nifty September 2013 futures closed at 5889.00 on Wednesday at a premium of 15.15 points over spot closing of 5,873.85, while Nifty October 2013 futures ended at 5938.15 at a premium of 64.30 points over spot closing. Nifty September futures saw contraction of 1.71 million (mn) units taking the total outstanding open interest (OI) to 11.95 mn units. The near month September 2013 derivatives contract will expire on September 26, 2013.

From the most active contracts, Tata Motors September 2013 futures last traded at a premium of 1.50 points at 344.45 compared with spot closing of 342.95. The number of contracts traded was 19,236.

BHEL September 2013 futures last traded at a discount of 1.85 points at 141.15 compared with spot closing of 143.00. The number of contracts traded was 19,280.

DLF September 2013 futures were at a premium of 0.55 points at 136.95 compared with spot closing of 136.40. The number of contracts traded was 19,546. 

ICICI Bank September 2013 futures last traded at a discount of 1.30 points at 938.20 compared with spot closing of 939.50. The number of contracts traded was 25,323.

Yes Bank September 2013 futures last traded at a premium of 2.65 points at 315.15 compared with spot closing of 312.50. The number of contracts traded was 32,710.

Among Nifty calls, 6,000 SP from the Sep month expiry was the most active call with an addition of 0.22 million open interest.

Among Nifty puts, 5,700 SP from the Sep month expiry was the most active put with contraction  of 0.14 million open interest.

The maximum OI outstanding for Calls was at 6,000 SP (6.65 mn) and that for Puts was at 5,700 SP (6.09 mn).

The respective Support and Resistance levels of Nifty are: Resistance 5919.23 -- Pivot Point 5865.17 -- Support -- 5819.78.

The Nifty Put Call Ratio (PCR) OI wise, stood at 1.46 for September month contract.

The top five scrips with highest PCR on OI were, SR Trans Fin 23.71, Mcleodruss 10.51, Coal India 1.76, Gail 1.61 and DR Reddy 1.61.

Among most active underlying, SBI witnessed contraction of 0.80 million in Open Interest in the Sep month futures contract followed by Reliance Industries with contraction of 0.48 million Open Interest in the near month contract; ICICI Bank witnessed contraction of 1.18 million of Open Interest in the Sep month futures. United Spirits witnessed a contraction of 0.94 million in Open Interest in the Sep month contract and Reliance Industries witnessed contraction of 0.48 million in Open Interest in the near month futures contract.