Nifty gains after previous sessions’ consolidation; ends at 8,350 mark

After consolidation in previous few sessions, Nifty witnessed a grand tussle between the bulls and the bears throughout the day and closed in the positive territory taking home gains of around two tenths of a percent. Sentiments got some support from international ratings agency Moody’s quarterly Global Macro Outlook report that it expected India to witness 'sustained robust growth' over the next two years. Sustained buying by foreign funds and retail investors on expectations of acceleration in economic reforms by the government after the expansion of the Union Cabinet also supported the upside. Furthermore, the fall in Brent Crude prices to a four-year low of $81.23, which is likely to help lower the fiscal deficit, also boosted sentiments. However, there was some cautiousness among investors ahead of announcement of key macroeconomic data such as IIP and inflation during the week. Traders were seen piling positions in Realty, Banking and Auto sector while selling was witnessed in Consumer Durables, FMCG, and information technology (IT) sector stocks.

After gap up opening, while showing some strength early morning and drifting lower later, only to recover in the final hour of trades, the index ended the session, with a gain of over two tenths of a percent, above its crucial 8,350 mark.

After trading in tight range in past three days, the market will move in either direction as domestic news with the potential to move the market includes inflation data, Index of Industrial Production data and also assessment of political developments like Cabinet expansion. 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.

The top gainers from the F&O segment were Jain Irrigation Systems, The Karnataka Bank and Allahabad Bank. On the other hand, the top losers were UPL, BHEL and ITC. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session, which shows that traders are buying more options contracts as insurance against declines in the market.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 6.25% and reached 14.80. The 50-share CNX Nifty increased by 18.40 points or 0.22% to settle at 8,362.65. Nifty November 2014 futures closed at 8395.85 on Tuesday at a premium of 33.20 points over spot closing of 8,362.65, while Nifty December 2014 futures ended at 8446.40 at a premium of 83.75 points over spot closing. Nifty November futures saw addition of 0.07 million (mn) units, taking the total outstanding open interest (OI) to 23.19 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 6.85 points at 915.85 compared with spot closing of 909.00. The number of contracts traded were 17,200.

Reliance Industries November 2014 futures traded at a premium of 7.00 points at 985.00 compared with spot closing of 978.00. The number of contracts traded were 21,031.

Tata Steel November 2014 futures traded flat compared with spot closing of 481.25. The number of contracts traded were 21,403.

Reliance Capital November 2014 futures traded at a premium of 1.85 points at 476.85 compared with spot closing of 475.00. The number of contracts traded were 24,539.

ICICI Bank November 2014 futures traded at a premium of 3.85 points at 1693.50 compared with spot closing of 1689.65. The number of contracts traded were 16,681. Among Nifty calls, 8400 SP from the October month expiry was the most active call with an addition of 0.37 million open interests. Among Nifty puts, 8,300 SP from the November month expiry was the most active put with an addition of 0.71 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.38 mn) and that for Puts was at 8,000 SP (5.76 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8386.95 --- Pivot Point 8354.40 --- Support --- 8330.10.

The Nifty Put Call Ratio (PCR) finally stood at 1.31 for November month contract. The top five scrips with highest PCR on OI were AXIS Bank (1.39), Hindustan Petroleum Corporation (1.35), Ranbaxy (1.33), DLF (1.33) and Dr. Reddy's Laboratories (1.24). 

Among most active underlying, State Bank of India witnessed an addition of 0.39 million of Open Interest in the November month futures contract, followed by Reliance Industries witnessing an addition of 0.27 million of Open Interest in the November  month contract; while Infosys witnessed a contraction of 0.07 million of Open Interest, ICICI Bank witnessed an addition of 0.08 million of Open Interest in the November month contract and Axis Bank witnessed a contraction of 0.08 million of Open Interest in the November month's future contract.