Nifty bounces with a bang on reform hopes, buoyant manufacturing activity

Barometer 50 share index- CNX Nifty staged a blockbuster performance on the last day of the week by vehemently rallying over a percentage point in the session and settling just below the psychological 8400 level. Sentiments got a boost after Indian manufacturing activity expanded at its fastest pace in two years in December as new orders, both from home and from abroad, flooded in and as factories kept price increases to a minimum. The HSBC India Purchasing Managers' Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, climbed to two year high at 54.5 in December, up from 53.3 in the prior month. Some support also came in as the Finance Ministry is expecting an improvement in the fiscal position in January-March quarter on a likely pick up in tax revenue realisation, receipts from spectrum auction and stake sale of PSUs.

Nifty, after a flat but positive start, gained ground and not even an iota of profit booking was seen in the session as the benchmark managed to gain fervently from strength to strength, with investors continuing their hunt for fundamentally strong stocks. On the sectoral front, Banking, consumer durables and power stocks were on buyers' radar on hopes of faster reforms by the new government, while airline stocks gained as oil marketing companies cut jet fuel prices by 12.5 per cent. 

The top gainers from the F&O segment were LIC Housing Finance, Jaiprakash Associates and Indiabulls Real Estate. On the other hand, the top losers were TVS Motor Company, Exide Industries and Allahabad Bank. 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 8.18% and reached 13.79. The 50-share CNX Nifty was up by 111.45 points or 1.35% to settle at 8,395.45.

Nifty January 2015 futures closed at 8458.40 on Friday at a premium of 62.95 points over spot closing of 8395.45, while Nifty February 2015 futures ended at 8510.55 at a premium of 115.10 points over spot closing. Nifty January futures saw an addition of 0.28 million (mn) units, taking the total outstanding open interest (OI) to 21.42 mn units. The near month derivatives contract will expire on January 29, 2015.

From the most active contracts, State Bank of India January 2015 futures traded at a premium of 2.15 points at 317.75 compared with spot closing of 315.60. The number of contracts traded were 22,525.

ICICI Bank January 2015 futures traded at a premium of 2.40 points at 365.40 compared with spot closing of 363.00. The number of contracts traded were 17,855.

HDFC Bank January 2015 futures traded at a premium of 7.15 points at 975.15 compared with spot closing of 968.00. The number of contracts traded were 17,580.

Axis Bank January 2015 futures traded at a premium of 3.40 points at 517.95 compared with spot closing of 514.55. The number of contracts traded were 22,298.

Tata Steel January 2015 futures traded at a premium of 2.95 points at 413.95 compared with spot closing of 411.00. The number of contracts traded were 23,780.Among Nifty calls, 8500 SP from the January month expiry was the most active call with a contraction of 0.53 million open interests. Among Nifty puts, 8,300 SP from the January month expiry was the most active put with a contraction of 0.12 million open interests. The maximum OI outstanding for Calls was at 8600 SP (3.66 mn) and that for Puts was at 8,000 SP (5.72 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8441.13 --- Pivot Point 8364.92 --- Support --- 8319.23.

The Nifty Put Call Ratio (PCR) finally stood at 1.31 for January month contract. The top five scrips with highest PCR on OI were Grasim (1.61), UltraTech Cement (1.14), DLF (1.11), YES Bank (1.09), and BHEL (1.07). 

Among most active underlying, State Bank of India witnessed a contraction of 0.39 million of Open Interest in the January month futures contract, followed by LIC Housing Finance witnessing an addition of 0.44 million of Open Interest in the January month contract; ICICI Bank witnessed an addition of 0.44 million of Open Interest in the January month contract, Larsen & Toubro witnessed an addition of 0.06 million of Open Interest in the January month contract and Infosys witnessed a contraction of 0.05 million of Open Interest in the January month's future contract.