Nifty makes triple digit gains; closes just below 8500 level

After a positive opening, Nifty making a smart show of strength surged with triple digit gains on RBI’s rate cut boost. The Reserve Bank of India (RBI) Governor Raghuram Rajan unexpectedly cut the benchmark repo rate by 25 basis points to 7.75% from 8%. Easing rate stance will help revive health of businesses which are highly sensitive to interest rate movements apart from improving the general sentiment towards investments. Besides, encouraging quarterly earnings by some blue-chip companies and a better trend at other Asian bourses too boosted sentiments. Some support also came in after United Nations (UN) in its report said that the Indian economy is likely to expand by 6.4 per cent this year, driving the economic growth in South Asia. Finance Minister Arun Jaitley hailed RBI’s decision, saying it is a positive development for the Indian economy and will certainly help in reviving the investment cycle the government is trying to restore.

In the last leg of trade, the market touched its intraday high as rate sensitive stocks improved their trajectory, but some profit booking in last minutes corrected the index from day’s high and ended the session tad below crucial 8,500 mark.

All the sectoral indices on the NSE settled in the positive territory with CNX Metal surging the most, ending with a gain of over eight percent followed by CNX Finance up by 4.52% and CNX PSU Bank up by 4.48% on NSE sectoral space. Meanwhile, India VIX - the gauge of underlying volatility in the market - - has lost its positive movement and ended in red, which indicates that traders have slowdown buying options contracts.

The top gainers from the F&O segment were HDIL, DLF and India Cements. On the other hand, the top losers were Federal Bank, Mindtree and Aurobindo Pharma. In the index options segment, maximum OI continues to be seen in the 8600-8700 calls and 8100-8200 puts indicating the expected trading range.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 6.30% and reached 16.16. The 50-share CNX Nifty was up by 216.60 points or 2.62% to settle at 8,494.15. Nifty January 2015 futures closed at 8515.05 on Thursday at a premium of 20.90 points over spot closing of 8494.15, while Nifty February 2015 futures ended at 8559.55 at a premium of 65.40 points over spot closing. Nifty January futures saw an addition of 3.06 million (mn) units, taking the total outstanding open interest (OI) to 20.64 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 2.55 points at 320.95 compared with spot closing of 318.40. The number of contracts traded were 52,264.

ICICI Bank January 2015 futures traded at a premium of 2.70 points at 353.50 compared with spot closing of 350.80. The number of contracts traded were 35,063.

IDFC January 2015 futures traded at a premium of 2.90 points at 169.00 compared with spot closing of 166.10. The number of contracts traded were 32,450.

HDFC Bank January 2015 futures traded at a premium of 10.55 points at 999.05 compared with spot closing of 988.50. The number of contracts traded were 42,645.

Reliance Industries January 2015 futures traded at a premium of 2.45 points at 865.45 compared with spot closing of 863.00. The number of contracts traded were 34,283.

Among Nifty calls, 8500 SP from the January month expiry was the most active call with a contraction of 0.80 million open interests. Among Nifty puts, 8,200 SP from the January month expiry was the most active put with an addition of 3 million open interests. The maximum OI outstanding for Calls was at 8700 SP (5.06 mn) and that for Puts was at 8,000 SP (6.84 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8553.98--- Pivot Point 8467.27--- Support --- 8407.43.

The Nifty Put Call Ratio (PCR) finally stood at 1.92 for January month contract. The top five scrips with highest PCR on OI were Ultratech Cement (1.92), HUL (1.53), BHEL (1.37), Grasim (1.33) and Maruti Suzuki (1.33). 

Among most active underlying, State Bank of India witnessed a contraction of 2.08 million of Open Interest in the January month futures contract, followed by Tata Consultancy Services witnessing an addition of 0.26 million of Open Interest in the January month contract; ICICI Bank witnessed a contraction of 0.26 million of Open Interest in the January month contract, Infosys witnessed an addition of 0.70 million of Open Interest in the January month contract and IDFC witnessed an addition of 6.01 million of Open Interest in the January month's future contract.