Bullish euphoria takes Nifty past 8500 level

Nifty continued its bull run for the third straight session and closed the exuberant day of trade with gains of half a percentage point on sustained buying by foreign funds and retail investors. The sentiments were on positive mood from early trades mainly driven by China’s surprise move last week to cut interest rates for the first time in more than two years. Furthermore, sustained capital inflows on expectations of further economic reforms by the government, expectation of possible rate cut and firm global cues also buoyed investor sentiments. Some support also came in after Finance Minister Arun Jaitley has said that Budget 2015-16 would unveil 'a whole set of second-generation reforms' as well as reforms that require undoing. Moreover, Indian infrastructure space is set for a major fund-boost worth billions of dollars from the foreign venture capital investors as regulator Sebi removed lacunae in norms to allow such investments. However, gains remained capped as a Ficci survey stated that the country’s manufacturing sector is likely to witness a moderate growth in the third quarter of this fiscal. Also, the foreign direct investment (FDI) to India, falling for the second month in a row, declined about 16 per cent to $2.45 billion in September.

After opening gap up and consolidating for initial part of the day, the National Stock Exchange’s broader 50-share CNX Nifty made a remarkable move in the latter half to end session with hefty gains of over half a percentage point. Traders were seen piling positions in information technology, Metal and Realty sector while selling was witnessed in Oil & Gas and FMCG sector stocks.

The market may remain volatile this 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 key economic data due later in November. The government will issue gross domestic product (GDP) data for the September quarter and fiscal deficit data for October on November 28, 2014. RBI also will announce its policy on December 2, 2014.

The top gainers from the F&O segment were JSW Energy, DLF and Jindal Steel. On the other hand, the top losers were IDEA, Power Grid and Glenmark. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session, which signals that there may not be a substantial drop in the Nifty. Besides, the rising put-call ratio indicates that some amount of profit booking may happen.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 6.03% and reached 13.01. The 50-share CNX Nifty increased by 52.80 points or 0.62% to settle at 8,530.15. Nifty November 2014 futures closed at 8535.50 on Monday at a premium of 5.35 points over spot closing of 8,530.15, while Nifty December 2014 futures ended at 8583.40 at a premium of 53.25 points over spot closing. Nifty November futures saw contraction of 2 million (mn) units, taking the total outstanding open interest (OI) to 18.90 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 2.10 points at 947.30 compared with spot closing of 945.20. The number of contracts traded were 47,179.

Reliance Industries November 2014 futures traded at a premium of 2.95 points at 988.25 compared with spot closing of 985.35. The number of contracts traded were 37,432.

State Bank of India November 2014 futures traded at a discount of 0.35 points at 308.50 compared with spot closing of 308.85. The number of contracts traded were 34,771.

Tata Steel November 2014 futures traded at a premium of 1.45 points at 478.05 compared with spot closing of 476.60. The number of contracts traded were 34,099.

HDFC Bank December 2014 futures traded at a premium of 11.20 points at 956.40 compared with spot closing of 945.20. The number of contracts traded were 33,052.

Among Nifty calls, 8500 SP from the October month expiry was the most active call with a contraction of 0.77 million open interests. Among Nifty puts, 8,500 SP from the November month expiry was the most active put with a contraction of 1.55 million open interests. The maximum OI outstanding for Calls was at 8600 SP (4.60 mn) and that for Puts was at 8,300 SP (6.72 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8546.27 --- Pivot Point 8518.53 --- Support --- 8502.42. The Nifty Put Call Ratio (PCR) finally stood at 1.85 for November month contract. The top five scrips with highest PCR on OI were DLF (1.80), SBI (1.45), Dr. Reddy's Laboratories (1.44), ICICI Bank (1.39) and Dabur (1.27). 

Among most active underlying, Infosys witnessed a contraction of 0.18 million of Open Interest in the November month futures contract, followed by State Bank of India witnessing a contraction of 1.10 million of Open Interest in the November  month contract; while ICICI Bank witnessed a contraction of 1.33 million of Open Interest, Reliance Industries witnessed a contraction of 5.56 million of Open Interest in the November month contract and HDFC Bank witnessed a contraction of 6.91 million of Open Interest in the November month's future contract.