Late recovery helps Nifty snap 7-day fall on FO expiry day, Sensex gains 123 pts

Equity benchmarks snapped seven-day losing streak on Thursday, the expiry day for September futures and options contracts, driven by banking & financials and ITC. The NSE F&O segment clocked the highest ever turnover of Rs 15 lakh crore.

The 30-share BSE Sensex was up 122.67 points at 31,282.48 but the gains were capped by index heavyweight Reliance Industries (down 1.6 percent) and Infosys (0.4 percent).

The 50-share NSE Nifty closed up 33.20 points at 9,768.95, but before this late recovery the index had breached psychological support level of 9,700 intraday.

Experts said today’s recovery was warranted after a sharp 4.1 percent fall in previous seven consecutive sessions, but this bounce back was unlikely to be sharp because of weak market sentiment. According to them, 9,700 is the crucial level for Nifty.

“Short to medium term chart suggests that some downside is still likely. Hence the choppy trade is expected to continue with some negative bias,” Mitessh Thakkar of miteshthacker.com said.

He feels if the Nifty decisively breaks 9,700 level then the next support level would be 9,550-9,520 while the upside may be capped at 9,950.

Mehraboon Irani of Nirmal Bang said the Nifty was not expected to fall below 9,500 but one should be wary of midcaps and smallcaps.

“Nifty sustaining above the key support of 9700 level in the next couple of sessions could open up the possibility of upside bounce in the market, which could take Nifty towards upper 9,950-9,980 levels, in the next 1-2 weeks,” Nagaraj Shetti of HDFC securities said.

For the September series, the Nifty fell 1.5 percent while Nifty Bank was down 1.3 percent and Midcap 1.8 percent.

“Good rollover was seen in cement, metal and pharma names and higher rollover cost suggests that the sector to outperform next month, while lower rollover cost is seen in IT and PSU banks suggests negative sentiments for the sectors,” Hariharan S., Head – Sales Trading, Emkay Global Financial Services said.

The broader markets continued to outperform benchmarks as the BSE Midcap and Smallcap indices gained 0.8-0.9 percent today. About two shares advanced against 976 declining shares on the BSE.

Meanwhile, the rupee also recovered from its fresh six and half month lows of 65.89 against the dollar hit in early trade, due to intervention from the RBI that sold dollars in futures market. It closed up 20 paise at 65.50 a dollar.

Nifty Bank recovered more than 400 points from its day’s low, to end with 195 points gains driven by Kotak Mahindra Bank (up 2.6 percent), HDFC Bank (1 percent), SBI (0.86 percent), IndusInd Bank (0.77 percent), Axis Bank (1 percent). ICICI Bank also cut losses in late trade.

ITC shares gained 1 percent. Global research firm Deutsche Bank feels the latest proposal to ban non-tobacco products on tobacco kiosks is neutral for cigarette companies. It has a buy rating on the stock, with a target price of Rs 350 per share.

HDFC, Maruti Suzuki, Bharti Infratel, Hindalco, Cipla, UltraTech Cement, ACC, Ambuja Cements, Tech Mahindra and Coal India among others gained 1-3.5 percent while Asian Paints, Aurobindo Pharma and Tata Motors declined 1-2.6 percent.

Dr Reddy’s Labs gained 3 percent on getting establishment inspection report from USFDA for Srikakulam plant unit 1. Dishman Carbogen rallied 5 percent on zero observations from USFDA for Switzerland unit.

Ruchi Soya surged nearly 12% on distribution agreement with Patanjali for edible oil. IRB Infrastructure share price gained nearly 8 percent as the management told CNBC-TV18 that subsidiary IRB InvIT sold stake in arm IRB Pathankot Amritsar for Rs 534 crore and this deal will add Rs 90 crore to net profit.

Reliance Capital, Bajaj Finance, Ashok Leyland, Reliance Communications, HOEC, Cyient, Infibeam, InterGlobe Aviation, Tata Global, LIC Housing Finance, Dewan Housing and PNB Housing Finance gained 2-10 percent. However, Avenue Supermarts, Future Retail fell more than 3 percent.
Global markets were mixed despite the US unveiled long-awaited tax reform plan that proposed bringing the corporate tax rate to 20 percent from 35 percent and reducing the highest individual income tax rate to 35 percent from 39.6 percent.