Nifty ends just above 8550 mark on profit booking

The fifty stock index -- Nifty -- started the new month on a down-beat note as blue-chips fell on risk aversion in global markets, while caution also prevailed a day ahead of the Reserve Bank of India's policy review. Although, the wide expectations are that Governor Raghuram Rajan, who has resisted calls to cut the repo rate even though retail price inflation dipped below the 6% target he wanted to hit by January 2016, may not oblige the street with a surprise. Sentiment on the street weakened as Indian rupee lost 22 paise to trade at a fresh nine-month low of 62.25 against the US dollar due to rise in  the greenback's value against other currencies overseas. The weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. However, losses remained capped as India's factory growth expanded at its fastest pace in nearly two years. November HSBC manufacturing PMI stood at 21-month high at 53.3 compared to 51.6 in October. Furthermore, Finance Minister Arun Jaitley’s statement that the government is committed to take more reforms measures going forward taking India back to its potential economic growth rate of 8% also supported the markets sentiments.

After gap up opening, nifty showed some strength in morning trades, but the sentiments turned pessimistic in early afternoon trades and the index drifted lower tracing weak trend in Asian stocks coupled with depreciation in rupee value. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. Although the index recovered from the lows of the day, it could not succeed in minimizing the huge losses by the end of trading session. Eventually, the index ended the day’s trade with a cut of over 30 points, holding its crucial 8,550 mark.

In the index options segment, maximum OI continues to be seen in the 8500-8600 calls and 8400-8500 puts indicating the expected trading range. In today's session, the 8600, 8700 and 8800 Call strikes saw addition of 2.21, 6.60 and 6.22 lakh shares, respectively. On the Put side, 8600 and 8500 strikes saw addition of 2.88 and 5.08 lakh shares, respectively.The top gainers from the F&O segment were Asian Paint, Strides Arcolab and Titan Company. On the other hand, the top losers were Unitech, Indiabulls Real Estate and HDIL.

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 ahead of the Reserve Bank of India's policy review.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 2.36% and reached 13.20. The 50-share CNX Nifty decreased by 32.35 points or 0.38% to settle at 8,555.90. Nifty December 2014 futures closed at 8595.90 on Monday at a premium of 40 points over spot closing of 8555.90, while Nifty January 2014 futures ended at 8648.95 at a premium of 93.05 points over spot closing. Nifty December futures saw contraction of 0.27 million (mn) units, taking the total outstanding open interest (OI) to 21.95 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 6.70 points at 969.30 compared with spot closing of 961.60. The number of contracts traded were 33,570.

State Bank of India December 2014 futures traded at a premium of 1.60 points at 321.20 compared with spot closing of 319.60. The number of contracts traded were 29,287.

SunPharma December 2014 futures traded at a premium of 5.15 points at 840.80 compared with spot closing of 835.65. The number of contracts traded were 19,397.

Infosys December 2014 futures traded at a discount of 8.70 points at 4341.15 compared with spot closing of 4349.85. The number of contracts traded were 18,649.

ONGC December 2014 futures traded at a discount of 1.35 points at 363.10 compared with spot closing of 364.45. The number of contracts traded were 18,209.

Among Nifty calls, 8700 SP from the December month expiry was the most active call with an addition of 0.52 million open interests. Among Nifty puts, 8,500 SP from the December month expiry was the most active put with an addition of 0.44 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.60 mn) and that for Puts was at 8,500 SP (4.71 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8604.22--- Pivot Point 8574.68--- Support --- 8526.37.

The Nifty Put Call Ratio (PCR) finally stood at 0.90 for December month contract. The top five scrips with highest PCR on OI were DLF (1.17), Bank of Baroda (1.14), Ranbaxy (1.07), PNB (1.05) and Dr. Reddy's Laboratories (1.04). 

Among most active underlying, State Bank of India witnessed a contraction of 2.89 million of Open Interest in the December month futures contract, followed by Reliance Industries witnessing an addition of 1.22 million of Open Interest in the December month contract; while Infosys witnessed  an addition of 0.63 million of Open Interest, Axis Bank witnessed an addition of 1.65 million of Open Interest in the December month contract and Maruti Suzuki  witnessed a contraction of 0.02 million of Open Interest in the December month's future contract.