Nifty clocks good gains for the third day in a row

Building on the gains of the previous session, domestic index Nifty kicked off the new month’s Future & Option series on a positive note. Earlier, the 50-stock benchmark made a gap up start tracking positive cues from global indices and sustained buying in almost all the key heavyweights along with broader indices to cross its crucial 8,550 mark in the early trade. Moreover, positive cues from other regional peers also set the positive mood for the bulls. The index carried on its strong run in afternoon trade as most of sectoral indices on the NSE were leading the markets higher where PSU Banking Index was on the front foot, with gaining more than five percent ahead of Reserve bank of India’s policy review in December in anticipation of a surprise rate cut by India’s apex bank. Sentiments were upbeat on sustained capital inflows after global crude oil prices fell to over 4-year lows, which is likely to help the government to tackle both current account and fiscal deficits. Traders were also getting some support with global ratings agency Moody’s report which expected the country's GDP to grow at 5.3 per cent in the July-September quarter of the current fiscal, better than 4.8 per cent clocked in the year-ago period. Besides, positions enlarged by retail investors ahead of the September quarter GDP data to be released later in the day and RBI monetary policy review next week also the influenced trading sentiment. Although some profit booking wetness in final hour of trade, but nifty end the session well above it crucial 8550 mark with the gain of over a percentage point.

Nifty started new series with open interest which is at one year high if seen on 1st day of new series basis. Most of the positions are long here which makes market susceptible to long unwinding correction to any negative trigger. On the day of the November F&O expiry, Nifty rolls were at 76.01 percent versus 3-month average of 69.79 percent (highest percentage roll October 2011). Market wide rollover was higher at 87.05 percent versus 3M average of 84.7 percent (highest percentage roll since April 2010).

In the index options segment, maximum OI continues to be seen in the 8500-8600 calls and 8000-8300 puts indicating the expected trading range. In today's session, the 8600, 8700 and 8800 Call strikes saw addition of 3.18, 5.66 and 16.58 lakh shares, respectively. On the Put side, 8500 and 8400 strikes saw addition of 11.65 and 11.82 lakh shares, respectively.

The top gainers from the F&O segment were HPCL, Canara Bank and PNB. On the other hand, the top losers were Cairn, IDEA and RCom. Meanwhile, India VIX - the gauge of underlying volatility in the market - - has risen in today's session, which shows that traders are buying more options contracts as insurance against declines in the market.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 0.16% and reached 12.89. The 50-share CNX Nifty increased by 94.05 points or 1.11% to settle at 8,588.25. Nifty December 2014 futures closed at 8638.35 on Friday at a premium of 50.10 points over spot closing of 8,588.25, while Nifty January 2014 futures ended at 8689.90 at a premium of 101.65 points over spot closing. Nifty December futures saw addition of 1.2 million (mn) units, taking the total outstanding open interest (OI) to 22.21 mn units. The near month derivatives contract will expire on December 24, 2014.

From the most active contracts, Reliance Industries December 2014 futures traded at a premium of 7.60 points at 999.20 compared with spot closing of 991.60. The number of contracts traded were 52,707.

State Bank of India December 2014 futures traded at a premium of 2.55 points at 323.95 compared with spot closing of 321.40. The number of contracts traded were 45,019.

Hindustan Petroleum Corporation December 2014 futures traded at a premium of 4.55 points at 601.10 compared with spot closing of 596.55. The number of contracts traded were 34,242.

HDFC Bank December 2014 futures traded at a premium of 10.40 points at 967.55 compared with spot closing of 957.15. The number of contracts traded were 27,516.

Tata Steel December 2014 futures traded at a premium of 1.95 points at 475.30 compared with spot closing of 473.35. The number of contracts traded were 27,119.

Among Nifty calls, 8700 SP from the December month expiry was the most active call with an addition of 0.56 million open interests. Among Nifty puts, 8,500 SP from the December month expiry was the most active put with an addition of 1.16 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.73 mn) and that for Puts was at 8,500 SP (4.35 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8631.42--- Pivot Point 8573.83--- Support --- 8530.67.

The Nifty Put Call Ratio (PCR) finally stood at 0.89 for December month contract. The top five scrips with highest PCR on OI were Bajaj-auto (1.22), Ranbaxy (1.16), Bank of Baroda (1.13), Dr. Reddy's Laboratories (1.07) and Century Textiles & Industries (1.07). 

Among most active underlying, State Bank of India witnessed an addition of 3.26 million of Open Interest in the December month futures contract, followed by Reliance Industries witnessing an addition of 0.50 million of Open Interest in the December month contract; while ICICI Bank  witnessed  an addition of 0.56 million of Open Interest, Infosys witnessed an addition of 0.33 million of Open Interest in the December month contract and HPCL witnessed an addition of 1.27 million of Open Interest in the December month's future contract.