Nifty fails to hold gains; closes just below 8400 mark

Nifty ended in green for third straight session on sustained capital inflows by foreign funds and widespread buying by retail investors amid a series of economic reforms undertaken by the Narendra Modi-led government and strong earnings by blue-chip companies. Besides, expectations of encouraging inflation data for October and IIP numbers for September also buoyed the trading sentiment. CPI inflation is expected to ease to 5.8 per cent in the month of October as compared to 6.3 per cent reported in the month of August, while Index of Industrial Production (IIP) data is likely to expand marginally to 0.8 per cent in September.

After gap up opening, nifty showed some strength in early morning trades however, it failed to breach the narrow 45-point range for most part of the day, ending the session below its crucial 8,400 mark with a gain of over two tenths of a percent. Sentiment on the street improved after Indirect tax revenues rose marginally by 5.6 per cent in the April-October period to over Rs 2.85 lakh crore, mainly on account of increase in service tax and customs collections. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 458.04 crore on November 11, 2014. Traders were seen piling positions in Auto, banking and FMCG sector stocks while selling was witnessed in Power, Metal and Capital Goods sector stocks.

The top gainers from the F&O segment were Mahindra & Mahindra Financial Services, Ashok Leyland and UPL. On the other hand, the top losers were IOC, Power Grid and Unitech. Meanwhile, India VIX - the gauge of underlying volatility in the market - has lost its positive movement and ended in red, which indicates that traders have slowdown buying options contracts.

After five days of consolidation, nifty may move in either direction as domestic news with the potential to move the market include inflation data and Index of Industrial Production data. In the index options segment, maximum OI continues to be seen in the 8500-8400 calls and 8300-8200 puts indicating the expected trading range.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.47% and reached 14.43. The 50-share CNX Nifty increased by 20.65 points or 0.25% to settle at 8,383.30. Nifty November 2014 futures closed at 8418.80 on Wednesday at a premium of 35.50 points over spot closing of 8,383.30, while Nifty December 2014 futures ended at 8469.85 at a premium of 86.55 points over spot closing. Nifty November futures saw addition of 0.58 million (mn) units, taking the total outstanding open interest (OI) to 23.77 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 7.95 points at 919.95 compared with spot closing of 912.00. The number of contracts traded were 27,344.

Reliance Industries November 2014 futures traded at a premium of 10.15 points at 981.70 compared with spot closing of 971.55. The number of contracts traded were 22,853.

Axis Bank November 2014 futures traded at a premium of 1.80 points at 483.40 compared with spot closing of 481.60. The number of contracts traded were 16,540.

Tata Steel November 2014 futures traded at a premium of 1.00 points at 469.00 compared with spot closing of 468.00. The number of contracts traded were 27,635.

Reliance Capital November 2014 futures traded at a premium of 3.95 points at 480.05 compared with spot closing of 476.10. The number of contracts traded were 24,619.

Among Nifty calls, 8400 SP from the October month expiry was the most active call with an addition of 0.17 million open interests. Among Nifty puts, 8,400 SP from the November month expiry was the most active put with an addition of 0.87 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.58 mn) and that for Puts was at 8,300 SP (6.09 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8408.73--- Pivot Point 8389.62 --- Support --- 8364.18.

The Nifty Put Call Ratio (PCR) finally stood at 1.36 for November month contract. The top five scrips with highest PCR on OI were AXIS Bank (1.65), Hindustan Petroleum Corporation (1.46), DLF (1.43), Ranbaxy (1.36) and HDFC (1.34). 

Among most active underlying, State Bank of India witnessed an addition of 0.21 million of Open Interest in the November month futures contract, followed by Ashok Leyland witnessing an addition of 3.87 million of Open Interest in the November  month contract; while Axis Bank witnessed a contraction of 1.55 million of Open Interest, Tata Steel witnessed an addition of 0.21 million of Open Interest in the November month contract and ICICI Bank  witnessed a contraction of 0.61 million of Open Interest in the November month's future contract.