Nifty gains marginally after previous session’s drubbing

The penultimate day of November series futures and options contract expiry turned out to be a volatile session for the CNX Nifty as it swung between gains and losses for most part of the day. The hangover from yesterday's trade continued into the start of the day and Nifty opened on a pessimistic note. Although the index recovered and gathered good amount of gains in late afternoon trade, but failed to sustain on persistent profit-booking by funds and retail investors ahead of the F&O expiry tomorrow. Traders were seen piling positions in Realty, Power and Metals while selling was witnessed in information technology, Banking and Infrastructure sector stocks.

Sentiment on the street improved after HSBC in its report stated that Foreign institutional investors warmed up to Asian equities in November as the region recorded net inflows of USD 5.3 billion, out of which India attracted $1.4 billion. The sentiments also took support from encouraging statement of Minister of State for Finance Jayant Sinha that India had the potential to become a $5 trillion economy in the next 10 years, if it grows at an average 7-8%. However, gains remained capped as ratings agency ICRA in its latest report highlighted that the Indian economic growth may have slowed to 5% in the July-September quarter due to a low kharif harvest, a slowdown in exports and muted government spending. 

Meanwhile, some investors remained on the sidelines and refrained from any buying activity ahead of monthly expiry in the derivatives segment and data on second quarter Current Account Deficit and official second quarter GDP figures due later in the week.

The market is likely to remain volatile this week with traders rolling over positions in the futures & options (F&O) segment from November to December 2014 series. Coming to F&O market internals, in the index options segment, maximum OI continues to be seen in the 8500-8600 calls and 8300-8400 puts indicating the expected trading range. In today's session, some traders exited from 8400, 8500 and 8600 calls on the back of profit booking.  Also, some build-up was visible in 8400 and 8500 put.

The top gainers from the F&O segment were DLF, JSW Energy and MRF. On the other hand, the top losers were ZEEL, Jindal Steel & Power and Aurobindo Pharma. 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 3.99% and reached 12.98. The 50-share CNX Nifty increased by 12.65 points or 0.15% to settle at 8,475.75. Nifty November 2014 futures closed at 8479.40 on Wednesday at a premium of 3.65 points over spot closing of 8475.75, while Nifty December 2014 futures ended at 8531.30 at a premium of 55.55 points over spot closing. Nifty November futures saw contraction of 3.6 million (mn) units, taking the total outstanding open interest (OI) to 9.42 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 discount of 0.15 points at 951.15 compared with spot closing of 951.30. The number of contracts traded were 58,425.

HDFC Bank December 2014 futures traded at a premium of 9.65 points at 960.95 compared with spot closing of 951.30. The number of contracts traded were 55,185.

Reliance Industries December 2014 futures traded at a premium of 8.35 points at 995.40 compared with spot closing of 987.05. The number of contracts traded were 39,845.

Reliance Capital November 2014 futures traded at a premium of 0.95 points at 502.65 compared with spot closing of 501.75. The number of contracts traded were 39,802.

Reliance Industries November 2014 futures traded at a premium of 1.25 points at 988.30 compared with spot closing of 987.05. The number of contracts traded were 39,727.

Among Nifty calls, 8500 SP from the October month expiry was the most active call with a contraction of 7.90 million open interests. Among Nifty puts, 8,400 SP from the November month expiry was the most active put with an addition of 1.03 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.56 mn) and that for Puts was at 8,400 SP (7.08 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8504.48 --- Pivot Point 8471.57 --- Support --- 8442.83. The Nifty Put Call Ratio (PCR) finally stood at 1.67 for November month contract. The top five scrips with highest PCR on OI were DLF (1.95), Dr. Reddy's Laboratories (1.74), Dabur (1.78), SBI (1.39) and HDFC (1.20). 

Among most active underlying, ICICI Bank witnessed a contraction of 1.81 million of Open Interest in the November month futures contract, followed by State Bank of India witnessing a contraction of 6.97 million of Open Interest in the November  month contract; while HDFC Bank witnessed a contraction of 9.54 million of Open Interest, Reliance Industries witnessed an addition of 7.16 million of Open Interest in the November month contract and Infosys witnessed a contraction of 0.41 million of Open Interest in the November month's future contract.