Nifty witnesses smart pull back rally; closes above 8,400 mark

The fifty stock index -- Nifty -- started the fresh week on a sluggish note but managed to eke out some gains by the end of trade as the benchmark index clawed back into the green terrain in the last leg of trade as data showed that trade deficit narrowed in October compared to the previous month. The October trade deficit stood at $13.36 billion versus $14.25 billion (M-o-M) with the exports at $26.09 billion Vs $28.90 billion (MoM). Sentiment on the street also improved as Services sector, which contributes more than 50% to the country’s gross domestic product (GDP), has witnessed its exports rising by 5.3 per cent to $12.94 billion in September this year compared to the same month last year. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 645.90 crore on November 14, 2014. However, gains remained capped as Japan’s economy unexpectedly slipped into recession in the third quarter, with gross domestic product (GDP) falling at an annualized 1.6% pace in July-September, after plunging to 7.3% in the second quarter following a rise in the national sales tax, which clobbered consumer spending.

Traders were seen piling positions in Infrastructure, Power and Auto sector while selling was witnessed in Metal and Healthcare sector stocks. Meanwhile, the sharp fall in benchmark inflation indices - Wholesale Price Index and Consumer Price Index - are bringing optimism among rate sensitive sectors on hopes that the Reserve Bank of India will either make a token cut or give a dovish outlook in the December policy.

After gap down opening, nifty kept losing steam and even drifted to the lowest point in the session in mid morning trades. But the indices managed to pare most of the losses in late afternoon trades as Services sector witnessed its exports rising by 5.3 per cent. After trading in a tight range for some time, the key gauges managed to gain momentum and bounced into the positive terrain by the end of trade. Eventually, the Nifty settled above the crucial 8,400 support level.

Coming to F&O market internals, in the index options segment, maximum OI continues to be seen in the 8400-8500 calls and 8300-8200 puts indicating the expected trading range.  The top gainers from the F&O segment were JSW Energy, REC and PFC. On the other hand, the top losers were Jindal Steel & Power, JP Associate and DLF.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.13% and reached 14.41. The 50-share CNX Nifty increased by 40.85 points or 0.49% to settle at 8,389.90. Nifty November 2014 futures closed at 8452.95 on Monday at a premium of 22.20 points over spot closing of 8,430.75, while Nifty December 2014 futures ended at 8500.85 at a premium of 70.10 points over spot closing. Nifty November futures saw contraction of 0.03 million (mn) units, taking the total outstanding open interest (OI) to 22.81 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 5.00 points at 924.20 compared with spot closing of 919.20. The number of contracts traded were 36,462.

Reliance Industries November 2014 futures traded at a premium of 1.55 points at 989.05 compared with spot closing of 987.50. The number of contracts traded were 20,465.

Tata Steel November 2014 futures traded at a premium of 2.50 points at 481.05 compared with spot closing of 478.55. The number of contracts traded were 16,340.

Tata Motors November 2014 futures traded at a premium of 2.70 points at 547.85 compared with spot closing of 545.15. The number of contracts traded were 35,920.

Reliance Capital November 2014 futures traded at a premium of 2.25 points at 504.50 compared with spot closing of 502.25. The number of contracts traded were 30,671.

Among Nifty calls, 8400 SP from the October month expiry was the most active call with a contraction of 0.03 million open interests. Among Nifty puts, 8,400 SP from the November month expiry was the most active put with an addition of 1.15 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.83 mn) and that for Puts was at 8,300 SP (6.28 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8462.87--- Pivot Point 8405.98--- Support --- 8373.87.

The Nifty Put Call Ratio (PCR) finally stood at 1.68 for November month contract. The top five scrips with highest PCR on OI were Eicher Motors (1.68), DLF (1.51), Dr. Reddy's Laboratories (1.51), Bank of Baroda (1.36) and Axis Bank (1.33). 

Among most active underlying, State Bank of India witnessed a contraction of 0.07 million of Open Interest in the November month futures contract, followed by Tata Motors witnessing an addition of 1.06 million of Open Interest in the November  month contract; while HDFC Bank witnessed a contraction of 0.81 million of Open Interest, Reliance Capital witnessed an addition of 0.91 million of Open Interest in the November month contract and ICICI Bank witnessed an addition of 0.14 million of Open Interest in the November month's future contract.