Bulls roar at the beginning of the Diwali week; Nifty rallies over 90 points

Barometer 50 share index- CNX Nifty witnessed stupendous gains on Monday as bulls roared, tracking strong global cues and reforms announced by the government regarding diesel price deregulation and hike in natural gas price. After gap up opening, nifty showed some strength in early morning trades however, it failed to breach the narrow 50-point range for most part of the day, ending the session above its crucial 7,850 mark with a gain of over a percentage point.

Sentiment on the street improved on the growth track after Narendra Modi-led BJP emerged as the largest party in Maharashtra, the country's largest industrial State and is poised to form a government in Haryana after acquiring a majority. Some strength also came in from IMF’s latest world economic outlook that, India is poised to become a  two trillion dollar economy this year, while its GDP size would cross another milestone of three trillion dollars after five years in 2019. However, losses in software and technology counter capped the gains.

On the sectoral front, State-owned oil and gas shares were up as the hike in gas prices would help improve revenue and profit going forward while lowering the subsidy burden. Furthermore, metal shares rebounded on reports about Chinese central bank considering injecting more liquidity in the economy to revive demand and arrest the deceleration in the Chinese growth.

The top gainers from the F&O segment were Andhra Bank, Oriental Bank of Commerce and Jain Irrigation Systems. On the other hand, the top losers were TCS, HCL Tech and CESC. Meanwhile, India VIX - the gauge of underlying volatility in the market - has lost 13.48% to 14.19 at close, the steepest drop since 19 May.

After completion of Maharashtra and Haryana Assembly elections, the market will now shift focus on global cues and earnings seasons in the near term. In the index option segment, maximum OI continues to be seen in the 8100-8000 calls and 7800-7700 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 13.48% and reached 14.19. The 50-share CNX Nifty increased by 99.70 points or 1.28% to settle at 7,879.40. Nifty October 2014 futures closed at 7897.25 on Monday at a premium of 17.85 points over spot closing of 7,879.40, while Nifty November 2014 futures ended at 7944.00 at a premium of 64.60 points over spot closing. Nifty October futures saw an addition of 0.58 million (mn) units, taking the total outstanding open interest (OI) to 16.23 mn units. The near month derivatives contract will expire on October 30, 2014.

From the most active contracts, HDFC Bank October 2014 futures traded at a premium of 2.45 points at 899.40 compared with spot closing of 896.95. The number of contracts traded were 16,544.

Reliance Industries October 2014 futures traded at a premium of 4.55 points at 938.55 compared with spot closing of 934.00. The number of contracts traded were 35,331.

Axis Bank October 2014 futures traded at a premium of 2.30 points at 419.45 compared with spot closing of 417.15. The number of contracts traded were 15,758.

DLF October 2014 futures traded at a discount of 0.10 points at 115.45 compared with spot closing of 115.55. The number of contracts traded were 16,140.

Jindal Steel & Power October 2014 futures traded at a discount of 0.80 points at 136.00 compared with spot closing of 136.80. The number of contracts traded were 27,286.

Among Nifty calls, 8000 SP from the October month expiry was the most active call with a contraction of 0.38 million open interests. Among Nifty puts, 7,900 SP from the October month expiry was the most active put with an addition of 1.22 million open interests. The maximum OI outstanding for Calls was at 8000 SP (6.42 mn) and that for Puts was at 7,700 SP (5.61 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7904.58 --- Pivot Point 7880.77 --- Support --- 7855.58.

The Nifty Put Call Ratio (PCR) finally stood at 0.97 for October month contract. The top five scrips with highest PCR on OI were PNB (1.20), SAIL (1.20), AXIS Bank (1.05), PFC (1.04) and BHEL (1.03). 

Among most active underlying, State Bank of India witnessed a contraction of 0.16 million of Open Interest in the October month futures contract, followed by Infosys witnessing an addition of 0.07 million of Open Interest in the October  month contract; while Tata Consultancy Services witnessed a contraction of 0.12 million of Open Interest, Reliance Industries witnessed an addition of 0.24 million of Open Interest in the October month contract and Axis Bank witnessed an addition of 2.82 million of Open Interest in the October month's future contract.