Nifty gains for second consecutive session; closes above 8550 level

The fifty stock index -- Nifty -- ended a range bound session in the positive terrain for second consecutive day on emergence of buying by funds and retail investors amid positive cues global markets. Gains in the index were led by shares of index heavyweight, ITC which rallied on expectations that the proposal to ban sale of loose cigarettes is likely to be put on hold. Besides, Realty stocks saw strong buying action after government's decision to lower built-up area and minimum capital requirements which need to be met by construction companies before accepting any foreign investments. Sentiment on the street improved with the Reserve Bank of India deputy governor H.R. Khan’s statement that the central bank is reasonably comfortable with the current account deficit because of lower oil prices. Furthermore, in its effort to boost confidence among taxpayers, the government has set up a High Level Committee (HLC) to interact with trade and industry and identify areas where clarity on tax laws is needed. Traders were seen piling positions in FMCG, Banking and Capital Goods sector while selling was witnessed in Infrastructure, Consumer Durables and Oil & Gas sector stocks.

The index opened on a positive note tracking strong global cues but, it erased all the early morning gains and slipped into red on account of profit booking in frontline counters. Market, for rest of the session, seesawed around the neutral line as investors remained sideways in the absence of any significant trigger at domestic front. However, some value buying in dying hours helped market to conclude session above 8550 mark with a gain of over three tenths of a percent.

The market may remain in a consolidation mode for some time due to lack of triggers in near term. November inflation and October industrial output data will be the next triggers. 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 a contraction of 1.32, 1.15 and 1.24 lakh shares, respectively. On the Put side, 8600, 8500 and 8400 strikes saw addition of 4.59, 5.65 and 4.19 lakh shares, respectively.

The top gainers from the F&O segment were Siemens, ITC and Strides Arcolab. On the other hand, the top losers were IRB, JP Associate and Tata Communications. Meanwhile, India VIX - the gauge of underlying volatility in the market - - has risen in today's session, which indicates that market participants expect uncertainty going ahead.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.63% and reached 12.44. The 50-share CNX Nifty increased by 26.75 points or 0.31% to settle at 8,564.40. Nifty December 2014 futures closed at 8605.75 on Thursday at a premium of 41.35 points over spot closing of 8564.40, while Nifty January 2014 futures ended at 8658.40 at a premium of 94 points over spot closing. Nifty December futures saw contraction of 0.62 million (mn) units, taking the total outstanding open interest (OI) to 19.90 mn units. The near month derivatives contract will expire on December 24, 2014.

From the most active contracts, State Bank of India December 2014 futures traded at a premium of 2.45 points at 322.75 compared with spot closing of 320.30. The number of contracts traded were 30,244.

ICICI Bank December 2014 futures traded at a premium of 0.55 points at 361.65 compared with spot closing of 362.20. The number of contracts traded were 23,561.

ONGC December 2014 futures traded at a discount of 0.85 points at 368.95 compared with spot closing of 370.80. The number of contracts traded were 19,629.

Tata Steel December 2014 futures traded at a premium of 3.30 points at 465.15 compared with spot closing of 461.85. The number of contracts traded were 18,636.

Tata Motors December 2014 futures traded at a premium of 4.10 points at 531.85 compared with spot closing of 527.75. The number of contracts traded were 18,026.

Among Nifty calls, 8600 SP from the December month expiry was the most active call with a contraction of 0.11 million open interests. Among Nifty puts, 8,500 SP from the December month expiry was the most active put with an addition of 0.56 million open interests. The maximum OI outstanding for Calls was at 8700 SP (5.48 mn) and that for Puts was at 8,500 SP (5.56 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8618.77--- Pivot Point 8572.58--- Support --- 8518.22.

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 Eicher Motors (2.10), DLF (1.17), SUN TV (1.13), Bajaj-Auto (1.12) and Ranbaxy (1.11). 

Among most active underlying, State Bank of India witnessed a contraction of 0.96 million of Open Interest in the December month futures contract, followed by ICICI Bank witnessing a contraction of 3.45 million of Open Interest in the December month contract; while Axis Bank witnessed  a contraction of 0.64 million of Open Interest, ITC witnessed a contraction of 0.79 million of Open Interest in the December month contract and Infosys witnessed a contraction of 0.07 million of Open Interest in the December month's future contract.