Nifty gains for sixth straight day; ends above 8850 mark

Nifty ended in green for sixth straight session on hopes of rate cut by the Reserve Bank of India due to slowing inflation and on reforms in the upcoming budget that would aid credit growth. Investor sentiment was bolstered with the government initiative to further ease procedures for seeking permission of the Foreign Investment Promotion Board (FIPB) for foreign direct investment (FDI). Some support also came with US markets closing in green and Asian markets extending their gains on optimism ahead of a European Central Bank meeting on bailout conditions for Greece. However, gains remained capped as the SBI Composite Index, an indicator for tracking India's manufacturing activity, registered a month-on-month decline to 48.3 in February 2015 from 52.1 in January 2015. Some caution also came with report that foreign portfolio investors (FPIs) sold shares worth a net Rs 182.80 crore on February 16, 2015.

After a positive opening, the index extended its gains as sustained buying was witnessed mostly in all the key heavyweights. Afterwards, the local index reclaimed its crucial 8,850 mark in morning trade as investors piled up stocks after Prime Minister Narendra Modi making a strong pitch for military indigenisation, said that the country's defence industry was at the core of his ‘Make in India’ mission. Prime Minister said even a 20-25 percent decrease in defence import can create 2 lakh jobs. Also, a 25 percent hike in domestic defence output can create 1 lakh skilled jobs. Last leg of trade brought some more cheer to the market and it touched its intraday high after External Affairs Minister Sushma Swaraj stated that the new Indian government would unveil more reforms in the coming days, including in the forthcoming budget this month to woo foreign investment and make India a manufacturing destination. Although, some profit booking appeared in final half an hour but Nifty managed to end the session above its crucial 8,850 mark with a gain of over six tenths of a percent.

Most of the sectoral indices on the NSE settled in the positive territory with CNX IT gaining the most, ending with a gain of over a percent followed CNX Finance up by 1.06% and CNX Auto up by 1.05%, while CNX Metal down 0.69%, CNX Realty down 0.48% and CNX PSU Bank down by 0.14% remained the top gainers on NSE sectoral space.

The top gainers from the F&O segment were Hexaware, Eicher Motors and Bosch. On the other hand, the top losers were Hero MotoCorp, Rural Electrification Corporation and DLF. In the index options segment for February series, maximum OI continues to be seen in the 9000-8900 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 0.42% and reached 20.91. The 50-share CNX Nifty was up by 59.75 points or 0.68% to settle at 8,869.10. Nifty February 2015 futures closed at 8891.30 on Wednesday at a premium of 22.20 points over spot closing of 8869.10, while Nifty March 2015 futures ended at 8948.55 at a premium of 79.45 points over spot closing. Nifty February futures saw contraction of 0.50 million (mn) units, taking the total outstanding open interest (OI) to 25.54 million (mn) units. The near month derivatives contract will expire on February 26, 2015.

From the most active contracts, State Bank of India February 2015 futures traded at a premium of 1.45 points at 307.10 compared with spot closing of 305.65. The number of contracts traded were 28,069.

ICICI Bank February 2015 futures traded at a premium of 1.00 points at 343.95 compared with spot closing of 342.95. The number of contracts traded were 15,693.

HDFC Bank February 2015 futures traded at a premium of 3.95 points at 1079.95 compared with spot closing of 1076.00. The number of contracts traded were 23,879.

Reliance Industries February 2015 futures traded at a premium of 4.20 points at 905.30 compared with spot closing of 901.10. The number of contracts traded were 22,806.

Axis Bank February 2015 futures traded at a premium of 1.75 points at 572.15 compared with spot closing of 570.40. The number of contracts traded were 19,822.

Among Nifty calls, 9000 SP from the February month expiry was the most active call with an addition of 0.37 million open interests. Among Nifty puts, 8800 SP from the February month expiry was the most active put with an addition of 0.20 million open interests. The maximum OI outstanding for Calls was at 9000 SP (6.61 mn) and that for Puts was at 8,500 SP (3.95 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8905.97--- Pivot Point 8857.43--- Support --- 8820.57.

The Nifty Put Call Ratio (PCR) finally stood at 0.98 for February month contract. The top five scrips with highest PCR on OI were HDIL (1.23), HCL Tech (1.20), Syndicate Bank (1.20), Infosys (1.04) and ACC (1.02). 

Among most active underlying, HCL Tech witnessed an addition of 1.36 million of Open Interest in the February month futures contract, followed by HDIL witnessing an addition of 1.22 million of Open Interest in the February month contract; Syndicate Bank witnessed an addition of 1.19 million of Open Interest in the February month contract, ACC witnessed an addition of 1.08 million of Open Interest in the February month contract and Sun TV witnessed a contraction of 1.06 million of Open Interest in the February month's future contract.