Nifty clocks smart gains; ends just below 8250 level

The fifty stock index -- Nifty -- commenced the last week of 2014 on an optimistic note as funds and retail investors made fresh buying on hopes that the government may adopt ordinance route for mines sector reforms. The sentiments were on optimistic note from the early trade after Finance Minister Arun Jaitley said that the economy is expected to grow ‘much better’ in 2015-16 as compared to the current financial year. He pointed that while Indian economy is expected to grow by 5.3 percent in the September quarter from a year earlier, it would grow 5.5% in the current financial year that ends on March 31. Some support also came in from the report that overseas investors poured in $2 billion in the Indian capital markets this month so far, taking total inflows to $42 billion since January this year. Furthermore, reports that the Narendra Modi government is set to unleash several big-ticket announcements over the next few weeks, starting with changes in the land acquisition law through an ordinance too supported the upside. However, the weakness in the Indian rupee for the fourth straight session weighed on market sentiment.

Friday’s optimism got spilled over into the Monday’s session helping the nifty in extending the winning momentum for second successive session as encouraging global developments buttressed domestic sentiments. Though, the local index pared some of its gains amid profit taking in select bank shares, metal shares gained on hopes that the government may adopt ordinance route for mines sector reforms. The market found strong support near its crucial 8,250 mark and started moving sideways with little volatility. Finally, Nifty ended the day’s trade with a gain of about 46 points, firmly over its psychological 8,200 mark.

Most of the sectoral indices on the NSE settled in the positive territory with CNX Metal gaining the most, up 2.20% followed by CNX Auto up by 1.46% and CNX Pharma up by 0.83% while CNX PSU Bank down by 0.34% and Bank Nifty down by 0.16% were remained the only losers in the trade.

The top gainers from the F&O segment were MRF, Motherson Sumi Systems and IFCI. On the other hand, the top losers were Union Bank of India, JSW Energy and SKS Microfinance. In the index options segment, maximum OI continues to be seen in the 8400-8600 calls and 8000-8200 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 0.43% and reached 14.58. The 50-share CNX Nifty increased by 45.60 points or 0.56% to settle at 8,246.30. Nifty January 2015 futures closed at 8316.45 on Monday at a premium of 70.15 points over spot closing of 8246.30, while Nifty February 2015 futures ended at 8369.25 at a premium of 122.95 points over spot closing. Nifty January futures saw addition of 0.38 million (mn) units, taking the total outstanding open interest (OI) to 21.08 mn units. The near month derivatives contract will expire on January 29, 2015.

From the most active contracts, Tata Steel January 2015 futures traded at a premium of 4.20 points at 408.30 compared with spot closing of 404.10. The number of contracts traded were 21,298.

Reliance Capital January 2015 futures traded at a premium of 4.80 points at 500.80 compared with spot closing of 496.00. The number of contracts traded were 16,139.

Reliance Infra January 2015 futures traded at a premium of 5.30 points at 512.85 compared with spot closing of 507.55. The number of contracts traded were 14,889.

State Bank of India January 2015 futures traded at a premium of 2.55 points at 310.10 compared with spot closing of 307.55. The number of contracts traded were 14,229.

Tata Motors January 2015 futures traded at a premium of 4.20 points at 499.25 compared with spot closing of 495.05. The number of contracts traded were 11,149.

Among Nifty calls, 8400 SP from the January month expiry was the most active call with an addition of 0.14 million open interests. Among Nifty puts, 8,200 SP from the January month expiry was the most active put with an addition of 0.51 million open interests. The maximum OI outstanding for Calls was at 8400 SP (3.44 mn) and that for Puts was at 8,000 SP (4.70 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8214.28 --- Pivot Point 8246.72 --- Support --- 8214.28.

The Nifty Put Call Ratio (PCR) finally stood at 1.32 for January month contract. The top five scrips with highest PCR on OI were Apollo Hospitals Enterprise (1.62), Lupin (1.21), Bajaj-Auto (1.18), IndusInd Bank (1.15) and Maruti Suzuki (1.10). 

Among most active underlying, State Bank of India witnessed an addition of 3 million of Open Interest in the January month futures contract, followed by Tata Steel witnessing a contraction of 0.18 million of Open Interest in the January month contract; Reliance Capital witnessed a contraction of 0.16 million of Open Interest in the January month contract, Reliance Industries witnessed a contraction of 0.11 million of Open Interest in the January month contract and Reliance Infrastructure witnessed an addition of 0.06 million of Open Interest in the January month's future contract.