Nifty snaps two-session losing streak, closes with modest gain

CNX Nifty after gyrating in a narrow band of 39 points finished its two session losing streak with a gain of 0.15 percent. Sentiment on the street improved as activity in India's services sector expanded at its fastest rate in five months in November on new order flows, but hiring declined for the first time in four months, showed the widely-tracked HSBC purchasing managers' index (PMI). The HSBC Services PMI rose to 52.6 in the month of november, compared with 50 in October. Besides, the RBI Governor Raghuram Rajan statement that a rate cut was likely early next year if the inflation momentum continued to follow a downward path also added to optimistic sentiments. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 107 crore on December 02, 2014.

After making a flat but positive start, Nifty plunged to the lowest point in the day in early morning as investors shifted focus to fundamentally sound shares in the broader market. Market, for rest of the session, seesawed around the neutral line as investors remained on the sidelines in the absence of any significant trigger at domestic front. However, some value buying in dying hours helped market to end the session in the green. Traders were seen piling positions in Auto, Realty and Energy sector while selling was witnessed in information technology (IT) and Pharma sector stocks.

In the index options segment, maximum OI continues to be seen in the 8600-8700 calls and 8400-8500 puts indicating the expected trading range. In today's session, the 8500, 8600 and 8700 Call strikes saw addition of 1.36, 5.51 and 5.44 lakh shares, respectively. On the Put side, 8500 and 8200 strikes saw addition of 2.81 and 4.37 lakh shares, respectively.

The top gainers from the F&O segment were Sun TV, MRF and JSPL. On the other hand, the top losers were SAIL, HDIL and Hindustan Petroleum Corporation. Meanwhile, India VIX - the gauge of underlying volatility in the market - - has declined for second consecutive day, which indicates that traders have slowdown buying options contracts. India VIX is normally inversely proportionate to market direction.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 6.12% and reached 12.39. The 50-share CNX Nifty decreased by 31.20 points or 0.36% to settle at 8,524.70. Nifty December 2014 futures closed at 8578.75 on Wednesday at a premium of 41.10 points over spot closing of 8537.65, while Nifty January 2014 futures ended at 8631.60 at a premium of 93.95 points over spot closing. Nifty December futures saw contraction of 0.88 million (mn) units, taking the total outstanding open interest (OI) to 20.51 mn units. The near month derivatives contract will expire on December 24, 2014.

From the most active contracts, ONGC December 2014 futures traded at a discount of 0.35 points at 371.10 compared with spot closing of 371.45. The number of contracts traded were 37,591.

ICICI Bank December 2014 futures traded at a premium of 4.50 points at 1798.60 compared with spot closing of 1794.10. The number of contracts traded were 30,736.

State Bank of India December 2014 futures traded at a premium of 1.80 points at 319.75 compared with spot closing of 317.95. The number of contracts traded were 25,284.

HDFC Bank December 2014 futures traded at a premium of 8.30 points at 941.40 compared with spot closing of 933.10. The number of contracts traded were 19,072.

Reliance Industries December 2014 futures traded at a discount of 4.35 points at 971.00 compared with spot closing of 974.35. The number of contracts traded were 16,341.

Among Nifty calls, 8600 SP from the December month expiry was the most active call with an addition of 0.55 million open interests. Among Nifty puts, 8,500 SP from the December month expiry was the most active put with an addition of 0.28 million open interests. The maximum OI outstanding for Calls was at 8700 SP (5.60 mn) and that for Puts was at 8,500 SP (4.99 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8553.62 --- Pivot Point 8530.98 --- Support --- 8515.02.

Among most active underlying, ICICI Bank  witnessed an addition of 0.28 million of Open Interest in the December month futures contract, followed by Infosys witnessing a contraction of 0.63 million of Open Interest in the December month contract; while State Bank of India witnessed  a contraction of 0.04 million of Open Interest, Axis Bank witnessed an addition of 0.30 million of Open Interest in the December month contract and Oil & Natural Gas Corporation  (ONGC) witnessed an addition of 1.73 million of Open Interest in the December month's future contract.