Nifty prolongs consolidation for second straight session

The fifty stock index -- Nifty -- continued its consolidation for second consecutive day as investors were uncertain about the direction of the trend, while buying in select stocks in the last leg of the session helped the index get into the positive territory. Sentiments were upbeat in early morning on hopes that expansion of the Union Cabinet will accelerate economic reforms, however investors preferred to stay on the sidelines with Reserve Bank of India Deputy Governor H.R. Khan stating that India's inflation has a 'long way' to go before it eases. Losses remained capped as Confederation of Indian Industry (CII) said that the ministry-expansion will help improve the focus on economic recovery. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 2537.13 crore on November 07, 2014. Traders were seen piling positions in FMCG, Consumer Durables and Power sector while selling was witnessed in Capital Goods, Oil & Gas and Auto sector stocks.

After making a flat but positive start, nifty showed some strength in early morning trades, however the sentiments turned pessimistic soon after and index drifted lower only to recover later from the lows of the day and close above its neutral line. Finally, Nifty ended the session slightly in the positive terrain with a gain of just over seven points.

The top gainers from the F&O segment were Bharat Forge, Havells India and Voltas. On the other hand, the top losers were India Cements, Unitech and Motherson Sumi Systems. In the index options segment, maximum OI continues to be seen in the 8500-8400 calls and 8100-8000 puts indicating the expected trading range. Moreover, India VIX - the gauge of underlying volatility in the market – has declined as traders turned cautious ahead of key macroeconomic data to be released in the week. The government will issue consumer and wholesale price inflation data for October on September 12 and September 14, 2014.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.28% and reached 13.93. The 50-share CNX Nifty increased by 7.25 points or 0.09% to settle at 8,344.25. Nifty November 2014 futures closed at 8379.50 on Monday at a premium of 35.25 points over spot closing of 8,344.25, while Nifty December 2014 futures ended at 8429.70 at a premium of 85.45 points over spot closing. Nifty November futures saw addition of 0.05 million (mn) units, taking the total outstanding open interest (OI) to 23.12 mn units. The near month derivatives contract will expire on November 27, 2014.

From the most active contracts, HDFC Bank November 2014 futures traded at a premium of 4.20 points at 912.15 compared with spot closing of 907.95. The number of contracts traded were 20,140.

ONGC November 2014 futures traded at a premium of 1.95 points at 396.30 compared with spot closing of 394.35. The number of contracts traded were 15,916.

Tata Steel November 2014 futures traded at a discount of 2.35 points at 471.95 compared with spot closing of 474.30. The number of contracts traded were 20,776.

Reliance Capital November 2014 futures traded at a premium of 3.05 points at 470.20 compared with spot closing of 467.15. The number of contracts traded were 18,802.

Sun Pharmaceutical Industries November 2014 futures traded at a discount of 2.00 points at 912.25 compared with spot closing of 914.25. The number of contracts traded were 18,577. Among Nifty calls, 8400 SP from the October month expiry was the most active call with a contraction of 0.04 million open interests. Among Nifty puts, 8,300 SP from the November month expiry was the most active put with an addition of 0.77 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.43 mn) and that for Puts was at 8,000 SP (5.80 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8383.38 --- Pivot Point 8343.92 --- Support --- 8304.78.

The Nifty Put Call Ratio (PCR) finally stood at 1.33 for November month contract. The top five scrips with highest PCR on OI were Oracle Financial Services Software (2.00), Dr. Reddys Laboratories (1.43), DLF (1.29), Hindustan Petroleum Corporation (1.27) and Hindustan Unilever (1.16). 

Among most active underlying, Larsen & Toubro witnessed an addition of 0.34 million of Open Interest in the November month futures contract, followed by State Bank of India witnessing a contraction of 0.01 million of Open Interest in the November  month contract; while Axis Bank witnessed a contraction of 1.19 million of Open Interest, Bharat Forge witnessed an addition of 0.19 million of Open Interest in the November month contract and Infosys witnessed an addition of 0.08 million of Open Interest in the November month's future contract.