Bulls push nifty past the crucial 7,900 mark

After gap up opening, nifty showed some strength in morning trades on sustained buying by funds and retail investors after the government announced more reforms and recommended the promulgation of an ordinance to facilitate e-auction of coal blocks for private companies for captive use and allot mines directly to state and central PSUs. Besides, revival of buying by foreign funds after remaining sellers for several sessions also supported the upside. Foreign institutional investors turned net buyers in equities to the tune of Rs 1,040 crore on October 20, 2014 after remaining net sellers in the previous five sessions. Though some profit booking emerged in late trades the bourses did well to reverse the trend and end the session with a gain of over half a percentage point, recapturing its crucial 7,900 mark.

Traders were seen piling positions in Realty, Power and Infrastructure while selling was witnessed in Oil & Gas sector stocks. Meanwhile, banking shares continue to trend up in trade with the National Stock Exchange (NSE) Bank Nifty hitting a lifetime high on expectation that various initiatives by new government will revive economic activity and help will boost credit growth. Among individual stocks, State Bank of India, ICICI Bank, Bank of India, Punjab National Bank, Canara Bank, YES Bank, Axis Bank and HDFC Bank were up 1-2% on the NSE.

The top gainers from the F&O segment were Jindal Steel & Power, TVS Motor and PFC. On the other hand, the top losers were Exide Industries, IGL and PNB. 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.

Meanwhile, most of the sectoral indices on the NSE made a positive closing. CNX REALTY up by 2.66% CNX Metal up by 1.87%, Bank Nifty up by 1.30%, CNX Media up by 1.22% and CNX Finance up by 1.10% remained the top gainers in the trade. While CNX Pharma down 0.28% and CNX Energy down 0.01% remained the losers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 6.06% and reached 13.13. The 50-share CNX Nifty increased by 48.35 points or 0.61% to settle at 7,927.75. Nifty October 2014 futures closed at 7946.40 on Tuesday at a premium of 18.65 points over spot closing of 7,927.75, while Nifty November 2014 futures ended at 7989.35 at a premium of 61.60 points over spot closing. Nifty October futures saw an addition of 0.55 million (mn) units, taking the total outstanding open interest (OI) to 16.79 mn units. The near month derivatives contract will expire on October 30, 2014.

From the most active contracts, Reliance Industries October 2014 futures traded at a premium of 5.25 points at 933.25 compared with spot closing of 928.00. The number of contracts traded were 20,957.

HDFC Bank October 2014 futures traded at a premium of 3.50 points at 900.25 compared with spot closing of 896.75. The number of contracts traded were 24,245.

DLF October 2014 futures traded at a premium of 0.70 points at 121.50 compared with spot closing of 120.80. The number of contracts traded were 18,251.

Jindal Steel & Power October 2014 futures traded at a premium of 0.55 points at 146.00 compared with spot closing of 145.45. The number of contracts traded were 18,704.

Tata Steel October 2014 futures traded at a premium of 0.40 points at 457.45 compared with spot closing of 457.05. The number of contracts traded were 16,749.

Among Nifty calls, 8000 SP from the October month expiry was the most active call with a contraction of 0.50 million open interests. Among Nifty puts, 7,900 SP from the October month expiry was the most active put with an addition of 0.93 million open interests. The maximum OI outstanding for Calls was at 8100 SP (6.57 mn) and that for Puts was at 7,800 SP (6.42 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7951.45--- Pivot Point 7912.90 --- Support --- 7889.20.

The Nifty Put Call Ratio (PCR) finally stood at 1.06 for October month contract. The top five scrips with highest PCR on OI were BHEL (1.39), SAIL (1.30), PFC (1.26), Axis Bank (1.22) and GAIL (1.07). 

Among most active underlying, Infosys witnessed an addition of 0.18 million of Open Interest in the October month futures contract, followed by Punjab National Bank witnessing an addition of 0.13 million of Open Interest in the October  month contract; while State Bank of India witnessed an addition of 0.18 million of Open Interest, HDFC Bank witnessed a contraction of 0.87 million of Open Interest in the October month contract and ICICI Bank witnessed a contraction of 0.08 million of Open Interest in the October month's future contract.