Nifty closes above 8900 levels; posting its 8th consecutive day of gains

The fifty stock index -- Nifty -- added to its eight successive session’s rally and hit another record high on Tuesday, as investors chose to ride the euphoria and went on accumulating fundamentally sound blue-chip stocks into their portfolio. Sentiments got a boost after US President Barack Obama, in a measure to bolster trade with India, pledged for investments and loans worth $4 billion by American agencies. World’s largest economy’s president at the India-US business summit assured that while US Export-Import Bank would be committing up to $1 billion in financing made in American exports to India, US Trade and Development Agency will aim to leverage nearly $2 billion investments in renewable energy in India. Sentiment on the street also improved as chief economic advisor Arvind Subramanian stated that the central bank may further ease the interest rates as improvement on price front has opened the space for monetary easing. Moreover, some support also came in from reports that overseas investors have pumped in a staggering over Rs 21,000 crore in Indian capital markets since the beginning of the month owing to easing inflation and rate cut by Reserve Bank of India (RBI). However, gains remained capped as minor profit booking came in some companies whose share prices have appreciated sharply.

After opening gap-up and consolidating for most part of the session, the nifty exhibited boisterous performance in the second half to close above 8900 levels, posting its 8th consecutive day of gains. Most of the sectoral indices on the NSE settled in the positive territory with Bank Nifty and CNX Finance gaining the most, ending with a gain of 2.40% followed by CNX Auto up by 1.30% and CNX Realty up by 1.21% while, CNX IT down 1.61%, CNX Metal down 0.73% and CNX Media up by 0.01% remained the major losers on NSE sectoral space.

Going forward the market is likely to show some correction as some stocks that have rapidly gained are in the overbought zone. The another reason for staying cautious at these levels is because corporate earnings growth for the quarter ended December 2014 is the slowest in eight quarters. The results are expected to be bad with low single-digit per cent growth in earnings. However, market may exhibit some upsides as some speculators might add potions ahead of the Reserve Bank of India's monetary policy on February 3, and the Union Budget next month.

The top gainers from the F&O segment were Eicher Motors, Indiabulls Housing Finance and Bosch. On the other hand, the top losers were Union Bank of India, Dr. Reddy's Laboratories and Cairn India. In the index options segment, maximum OI continues to be seen in the 8900-9000 calls and 8800-8700 puts indicating the expected trading range.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.20% and reached 18.08. The 50-share CNX Nifty was up by 74.90 points or 0.85% to settle at 8,910.50. Nifty January 2015 futures closed at 8922.65 on Tuesday at a premium of 12.15 points over spot closing of 8910.50, while Nifty February 2015 futures ended at 8987.25 at a premium of 76.75 points over spot closing. Nifty January futures saw contraction of 6.67 million (mn) units, taking the total outstanding open interest (OI) to 16.07 million (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 discount of 0.75 points at 330.70 compared with spot closing of 331.45. The number of contracts traded were 40,496.

ICICI Bank January 2015 futures traded at a premium of 0.55 points at 384.35 compared with spot closing of 383.80. The number of contracts traded were 42,207.

HDFC Bank January 2015 futures traded at a premium of 7.20 points at 1075.20 compared with spot closing of 1068.00. The number of contracts traded were 77,017.

Reliance Industries January 2015 futures traded at a premium of 3.40 points at 890.65 compared with spot closing of 887.25. The number of contracts traded were 50,813.

Axis Bank January 2015 futures traded at a premium of 0.20 points at 593.45 compared with spot closing of 593.25. The number of contracts traded were 51,826.Among Nifty calls, 8900 SP from the January month expiry was the most active call with an addition of 0.14 million open interests. Among Nifty puts, 8,800 SP from the January month expiry was the most active put with a contraction of 0.86 million open interests. The maximum OI outstanding for Calls was at 9000 SP (4.73 mn) and that for Puts was at 8,700 SP (4.70 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8948.55--- Pivot Point 8887.00--- Support --- 8848.95.

The Nifty Put Call Ratio (PCR) finally stood at 1.86 for January month contract. The top five scrips with highest PCR on OI were Ultratech Cement (1.77), YES Bank (1.74), AXIS Bank (1.72), Infosys (1.47) and DLF (1.40). 

Among most active underlying, Maruti Suzuki India witnessed a contraction of 0.74 million of Open Interest in the January month futures contract, followed by ICICI Bank witnessing a contraction of 12.88 million of Open Interest in the January month contract; HDFC Bank witnessed a contraction of 12.49 million of Open Interest in the January month contract, State Bank of India witnessed a contraction of 17.60 million of Open Interest in the January month contract and Axis Bank witnessed a contraction of 5.21 million of Open Interest in the January month's future contract.