Bullish sentiments help Nifty conquer crucial 8,450 mark

The fifty stock index -- Nifty -- showcased yet another courageous performance and went on to outclass indices around the world by vivaciously rallying by over a percentage points in the session and settling above the psychological 8450 level. Traders were seen piling positions in Banking, Capital Goods and FMCG sector while selling was witnessed in IT and TECK sector stocks.

After a positive opening, market started extending its gains as investors were largely influenced by the supportive leads from Asian markets. Afterwards, the local index extended its gains and conquered crucial 8,450 mark in morning trade as investor sentiments remained up-beat on fresh capital inflows led by a series of economic reforms announced recently by the government. Also, some support came after Finance Minister Arun Jaitley asked the chiefs of public sector banks (PSBs) to increase the flow of credit to various sectors of the economy without being unduly conservative and firmly deal with the issue of rising non-performing assets (NPAs). Moreover, the investors remained in cheerful mood as the parliament convenes its winter session in which the government is confident of passing legislation to allow more foreign investments in the insurance industry. Market continued their strong run till mid noon trade as rally in European markets too supported the sentiments with CAC, DAX and FTSE were trading with a gain of around a percent in early deals. Last leg of trade brought some more cheer to the market and it touched its intraday high as sustained buying was witnessed mostly in all the key heavyweights along with broader indices.

The market may remain volatile in next week as traders would roll over positions in the futures & options (F&O) segment from the near month November 2014 series to December 2014 series. Further, Investors are keeping a close watch on Monday as the parliament convenes its winter session in which the government is confident of passing legislation to allow more foreign investment in the insurance industry. 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. In today's session, some traders exited from 8300, 8400 and 8500 Calls on the back of profit booking. On the other hand, 8500 and 8400 Puts saw addition of 19.85 and 15.87 lakh shares, respectively.

The top gainers from the F&O segment were Karnataka Bank, Voltas and Federal Bank. On the other hand, the top losers were Apollo Hospitals Enterprise, CESC and Jindal Steel & Power. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session, which indicates that traders have slowdown buying options contracts.  

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.21% and reached 13.85. The 50-share CNX Nifty increased by 75.45 points or 0.90% to settle at 8,477.35. Nifty November 2014 futures closed at 8492.40 on Friday at a premium of 15.05 points over spot closing of 8,477.35, while Nifty December 2014 futures ended at 8541.25 at a premium of 63.90 points over spot closing. Nifty November futures saw contraction of 0.44 million (mn) units, taking the total outstanding open interest (OI) to 20.97 mn units. The near month derivatives contract will expire on November 27, 2014.

From the most active contracts, State Bank of India November 2014 futures traded at a discount of 0.20 points at 305.30 compared with spot closing of 305.50. The number of contracts traded were 52,532.

HDFC Bank November 2014 futures traded at a premium of 2.75 points at 934.95 compared with spot closing of 932.20. The number of contracts traded were 44,042.

Reliance Industries November 2014 futures traded at a premium of 3.40 points at 999.60 compared with spot closing of 996.20. The number of contracts traded were 34,864.

Axis Bank November 2014 futures traded at a premium of 2.40 points at 478.60 compared with spot closing of 476.20. The number of contracts traded were 17,632.

Tata Steel November 2014 futures traded at a premium of 0.40 points at 463.55 compared with spot closing of 463.15. The number of contracts traded were 23,389.

Among Nifty calls, 8500 SP from the October month expiry was the most active call with a contraction of 0.89 million open interests. Among Nifty puts, 8,400 SP from the November month expiry was the most active put with an addition of 1.28 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.84 mn) and that for Puts was at 8,300 SP (6.79 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8511.90 --- Pivot Point 8455.25 --- Support --- 8420.70. The Nifty Put Call Ratio (PCR) finally stood at 1.69 for November month contract. The top five scrips with highest PCR on OI were Dr. Reddy's Laboratories (1.65), DLF (1.55), ICICI Bank (1.36), SBI (1.26) and Dabur (1.18). 

Among most active underlying, State Bank of India witnessed a contraction of 1.08 million of Open Interest in the November month futures contract, followed by ICICI Bank witnessing a contraction of 0.38 million of Open Interest in the November  month contract; while Reliance Industries witnessed a contraction of 3.31 million of Open Interest, Reliance Industries witnessed a contraction of 0.12 million of Open Interest in the November month contract and Axis Bank witnessed a contraction of 1.32 million of Open Interest in the November month's future contract.