Nifty extends gains for second consecutive session; closes tad below 8100 level

The fifty stock index -- Nifty -- continued its northward journey for second consecutive day on Wednesday and finished the excellent day of trade with a gain of over 62 points or 0.78%, on the back of positive global cues and strong buying in heavyweights like Infosys, Tata Steel and Reliance Industries. After gap up opening, nifty showed some strength in early morning trades however, it failed to breach the narrow 46-point range for most part of the day, ending the session above its crucial 8,050 mark with a gain of over seven tenths of a percent. Traders were seen piling positions in Realty, Auto and Metal while selling was witnessed in Banking and Healthcare sector stocks.

The sentiments were optimistic from early trades as India's engineering exports grew by over 20 per cent year-on-year to $6.48 billion in September on account of high demand particularly in South Asia and West Asian nations. Besides, hopes of further reforms and encouraging earnings by some more blue chip companies and covering-up of short positions by speculators in view of tomorrow's monthly expiry in the derivatives segment also influenced the trading sentiments. Some support also came with optimism over U.S. corporate earnings and speculation that the Federal Reserve will reiterate its stance to keep interest rates low for a ‘considerable time’ to address the recent weakening in inflation and the poor quality of a recovery in labour markets. However, gains remained capped as global ratings agency Standard & Poor’s warned that gross non-performing assets (NPAs) of Indian banks are likely to rise to 4.5 per cent by the end of March 2015 from 4 per cent in the previous year.

Nifty may remain volatile tomorrow as traders roll over positions in the futures & options (F&O) segment from the near month October 2014 series to November 2014 series. In the index option segment, maximum OI continues to be seen in the 8100-8200 calls and 8000-7900 puts indicating this is the trading range expectation. In today’s trade, the 7900 and 8000 Calls witnessed reduction of 4.90 and 11.08 lakh shares, respectively. The 8000 and 8100 Put strikes saw addition of 4.98 and 12.94 lakh shares, respectively.

The top gainers from the F&O segment were Just Dial, Hindalco and DLF. On the other hand, the top losers were Oriental Bank of Commerce, Biocon and Union Bank of India. Meanwhile, India VIX - the gauge of underlying volatility in the market – has declined for second consecutive day as traders turned cautious ahead of the expiry of derivatives contract on October 30, 2014.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.38% and reached 13. The 50-share CNX Nifty increased by 62.85 points or 0.78% to settle at 8,090.45. Nifty October 2014 futures closed at 8089.15 on Wednesday at a discount of 1.30 points over spot closing of 8,090.45, while Nifty November 2014 futures ended at 8135.15 at a premium of 44.70 points over spot closing. Nifty October futures saw contraction of 1.52 million (mn) units, taking the total outstanding open interest (OI) to 12.12 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 0.65 points at 951.7 compared with spot closing of 951.05. The number of contracts traded were 46,945.

HDFC Bank October 2014 futures traded at a premium of 0.45 points at 892.95 compared with spot closing of 892.50. The number of contracts traded were 21,409.

Tata Steel October 2014 futures traded at a discount of 0.90 points at 471.6 compared with spot closing of 472.50. The number of contracts traded were 23,337.

ICICI Bank October 2014 futures traded at a discount of 6.10 points at 1602.45 compared with spot closing of 1,608.55. The number of contracts traded were 21,467.

Tata Consultancy Services October 2014 futures traded at a premium of 1.45 points at 2505.45 compared with spot closing of 2,504.00. The number of contracts traded were 19,950.Among Nifty calls, 8100 SP from the October month expiry was the most active call with a contraction of 0.02 million open interests. Among Nifty puts, 8,000 SP from the October month expiry was the most active put with an addition of 0.49 million open interests. The maximum OI outstanding for Calls was at 8100 SP (6.46 mn) and that for Puts was at 8,000 SP (6.12 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8108.18 --- Pivot Point 8080.22 --- Support --- 8062.48.

The Nifty Put Call Ratio (PCR) finally stood at 1.13 for October month contract. The top five scrips with highest PCR on OI were Kotak Bank (1.78), BHEL (1.57), Bajaj-Auto (1.55), Dabur (1.48) and Axis Bank (1.45). 

Among most active underlying, Infosys witnessed a contraction of 0.13 million of Open Interest in the October month futures contract, followed by State Bank of India witnessing a contraction of 0.27 million of Open Interest in the October  month contract; while Tata Steel witnessed a contraction of 2.30 million of Open Interest, Reliance Industries witnessed a contraction of 4.18 million of Open Interest in the October month contract and HDFC Bank witnessed an addition of 8.52 million of Open Interest in the October month's future contract.