Nifty snaps three-day losing streak; closes above 8,350 mark

After witnessing drubbing in previous three sessions, domestic index Nifty heaved a sigh of relief garnering a marginal gain in Wednesday’s trade. Although the sentiments were pessimistic in early trades tracking weak trade in global market, they turned positive after Finance Minister Arun Jaitley asserted that the rise in the current account deficit (CAD) was not a cause for concern because of the comfortable foreign exchange reserve position of the country. Some support also came in from international credit rating agency Moody's report that Indian economy is expected to pick up pace in 2015 and grow in the range of 5-6 per cent, helped by strong domestic demand. It also projected that corporates would see improved cash flows on account of acceleration in manufacturing activity. However, prevailing cautiousness ahead of the release of key macroeconomic data, i.e, consumer price index (CPI)-based inflation and Index of Industrial Production (IIP) data on Friday, kept the gains in check.

After gap down opening, nifty showed some strength in early morning trade but failed to sustain it on sustained selling by funds and investors amid weak global cues. Thereafter, the trade became volatile but nifty managed to end the day’s trade with a gain of about two tenths of a percent above its crucial 8,350 level. Traders were seen piling up positions in Consumer Durables, PSU and Banking stocks while selling was witnessed in Capital Goods, Information Technology (IT) and FMCG sector stocks.

The top gainers from the F&O segment were SKS Microfinance, Andhra Bank and IOB. On the other hand, the top losers were Havells, NMDC and BHEL. In the index options segment, maximum OI continues to be seen in the 8500-8600 calls and 8400-8300 puts indicating the expected trading range. 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 2.02% and reached 12.24. The 50-share CNX Nifty increased by 14.95 points or 0.18% to settle at 8,355.65. Nifty December 2014 futures closed at 8406.80 on Wednesday at a premium of 51.15 points over spot closing of 8355.65, while Nifty January 2014 futures ended at 8466.70 at a premium of 111.05 points over spot closing. Nifty December futures saw contraction of 0.14 million (mn) units, taking the total outstanding open interest (OI) to 21.98 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 1.35 points at 318.15 compared with spot closing of 316.80. The number of contracts traded were 28,617.

ICICI Bank December 2014 futures traded at a premium of 2.65 points at 354.55 compared with spot closing of 351.90. The number of contracts traded were 17,339.

HDFC Bank December 2014 futures traded at a premium of 6.70 points at 939.05 compared with spot closing of 932.35. The number of contracts traded were 15,175.

Reliance Industries December 2014 futures traded at a premium of 8.55 points at 939.95 compared with spot closing of 931.40. The number of contracts traded were 17,822.

Tata Motors December 2014 futures traded at a premium of 3.75 points at 513.75 compared with spot closing of 510.00. The number of contracts traded were 20,798.

Among Nifty calls, 8500 SP from the December month expiry was the most active call with an addition of 0.18 million open interests. Among Nifty puts, 8,300 SP from the December month expiry was the most active put with a contraction of 0.53 million open interests. The maximum OI outstanding for Calls was at 8600 SP (6.41 mn) and that for Puts was at 8,400 SP (4.99 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8382.63--- Pivot Point 8349.82--- Support --- 8322.83.

The Nifty Put Call Ratio (PCR) finally stood at 0.86 for December month contract. The top five scrips with highest PCR on OI were ITC (1.42), DLF (1.25), Shriram Transport Finance Company (1.11), Sun TV (1.02) and All Prices in LIC Housing Finance (0.95). 

Among most active underlying, State Bank of India witnessed an addition of 1.74 million of Open Interest in the December month futures contract, followed by Infosys witnessing an addition of 0.07 million of Open Interest in the December month contract; while Reliance Capital witnessed  an addition of 0.50 million of Open Interest, LIC Housing Finance witnessed an addition of 1.20 million of Open Interest in the December month contract and SKS Microfinance witnessed a contraction of 0.33 million of Open Interest in the December month's future contract.