Nifty extends gains for third consecutive session; closes above 8950 level

The fifty stock index -- Nifty -- continued its northward journey for third consecutive day on Monday and finished the volatile day of trade with a gain of 54 points or 0.62%, on growth-oriented proposals in the Budget. The Sentiment got bolstered as the Union Budget tabled by Finance Minister Arun Jaitley reduced corporate tax and announced a timeline to implement the General Sales Tax. The Budget laid thrust on infrastructure growth and also planned to bring down the fiscal deficit to 3% in three years. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 614.03 crore on February 28, 2015. However, gains remained capped as Ratings agency Standard & Poor's does not expect an upgrade to India's sovereign debt rating in the next year. Adding to the concerns, a private survey showed manufacturing activity expanded at its slowest pace in five months in February. The HSBC Manufacturing Purchasing Managers' Index, compiled by Markit, fell for the second consecutive month, to 51.2 in February from 52.9 in January.

After gap up opening, nifty showed some strength in morning trades, but the sentiments turned pessimistic in the late morning session and index drifted lower after growth in India’s manufacturing activities fell to a five-month low in February. However, the market regained its momentum in the final hour of trade and finished the day higher by over half a percent on the index. Although, most of the sectoral indices on the NSE settled in the negative territory with CNX FMCG loosing the most, ending with a loss of 2.15 present followed CNX Realty down by 0.33 present and CNX Auto down by 0.18 present, while CNX Pharma up 1.91 present, Bank Nifty up 1.61 present and CNX Finance up by 1.49 present remained the top gainers on NSE sectoral space.

The top gainers from the F&O segment were Rural Electrification Corporation, Voltas and UltraTech Cement. On the other hand, the top losers were GMR Infrastructure, ITC and Jindal Steel & Power. In the index options segment for March series, maximum OI continues to be seen in the 9100-9200 calls and 8600-8500 puts indicating the expected trading range. Meanwhile, India VIX - the gauge of underlying volatility in the market - has slumped 6.61 percent, lowest since January 5, as there are no more events ahead till the Reserve Bank of India meeting.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 6.61% and reached 15.84. The 50-share CNX Nifty was up by 54.90 points or 0.62% to settle at 8,956.75. Nifty March 2015 futures closed at 9000.70 on Monday at a premium of 43.95 points over spot closing of 8956.75, while Nifty April 2015 futures ended at 9064.20 at a premium of 107.45 points over spot closing. Nifty March futures saw an addition of 0.87 million (mn) units, taking the total outstanding open interest (OI) to 26.58 million (mn) units. The near month derivatives contract will expire on March 26, 2015.

From the most active contracts, SBI March 2015 futures traded at a premium of 2.80 points at 304.40 compared with spot closing of 301.60. The number of contracts traded were 34,234.

ICICI Bank March 2015 futures traded at a premium of 1.70 points at 350.90 compared with spot closing of 349.20. The number of contracts traded were 31,552.

IDFC March 2015 futures traded at a premium of 1.55 points at 183.90 compared with spot closing of 182.35. The number of contracts traded were 25,928.

ITC March 2015 futures traded at a premium of 3.05 points at 346.20 compared with spot closing of 343.15. The number of contracts traded were 34,364.

HDFC Bank March 2015 futures traded at a premium of 15.60 points at 1096.60 compared with spot closing of 1081.00. The number of contracts traded were 42,324.

Among Nifty calls, 9200 SP from the March month expiry was the most active call with an addition of 0.15million open interests. Among Nifty puts, 8800 SP from the March month expiry was the most active put with an addition of 0.56 million open interests. The maximum OI outstanding for Calls was at 9200 SP (3.88 mn) and that for Puts was at 8,500 SP (4.14 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8990.92 --- Pivot Point 8938.18 --- Support --- 8904.02.

The Nifty Put Call Ratio (PCR) finally stood at 1.03 for March month contract. The top five scrips with highest PCR on OI were STAR (1.27), Mcleod Russel India (1.26), Siemens (1.23), Cairn (1.20) and UltraTech Cement (1.11). 

Among most active underlying, Axis Bank witnessed a contraction of 1.00 million of Open Interest in the March month futures contract, followed by Larsen & Toubro witnessing a contraction of 0.17 million of Open Interest in the March month contract; ITC witnessed an addition of 7.36 million of Open Interest in the March month contract, State Bank of India witnessed an addition of 2.35 million of Open Interest in the March month contract and ICICI Bank witnessed a contraction of 0.79 million of Open Interest in the March month's future contract.