GST hopes buoys Nifty; ends above 7900 level

The fifty stock index -- Nifty -- continued its northward journey for second consecutive day on Friday and finished the excellent day of trade with gain of 58 points or 0.75%, on revival of buying by funds and retail investors on hopes that the government would look for a compromise with opposition leaders to pass a key reform on a goods and services tax (GST). Besides, a better-than-expected roll-over rate after Thursday's derivatives expiry also supported market gains. On the global front, Asian markets closed mostly lower on Friday, led by late hour sell off in the Chinese market as brokerages tumbled after authorities launched probes for alleged violations of trading rules. Selling intensified after Beijing said industrial profits fell more than forecast in October, and reinforcing worries about the world's number two economy, a key driver of global expansion. Further, European stocks fell in early trade, pulling back from three-month highs, with mining shares feeling the weight from the worst rout in Chinese equities since late August.

Back home, after gap up opening, Indian benchmark Nifty showed some strength in morning trades, but the sentiment turned pessimistic in afternoon trades and index start drifting lower, however the market regained its momentum in the final hour of trade and finished the day gaining over three fourth of a percent on the index. Sentiments got a boost on the report that Prime Minister Narendra Modi will meet opposition Congress party leader Sonia Gandhi on Friday evening to discuss a landmark tax reform and other bills to be debated in the winter session of parliament. Some support also came with report that the Prime Minister Narendra Modi's ambitious project 'Housing For All' has the potential to push up the country's economy by 3.5 per cent by 2022 with sectors supplying crucial inputs to the construction industry being the biggest beneficiaries. However, the initial gains were capped over concerns about the weakness in rupee, which despite recovering from its over two-year low, remained under pressure on persistent bouts of month-end dollar demand from importers and banks. Meanwhile, gains were led by financial stocks with investors buying beaten-down bank stocks ahead of the RBI monetary policy due on December 1, 2015. Metal stocks witnessed a strong buying interest as the as copper prices jumped in global commodity markets. Besides, some buying also seen in the infra stocks after the government approved an investment of Rs 3,120 crore for boosting urban infrastructure in 102 cities across five states, including enhancing water supply, sewerage network, non-motorised transportation system and availability of public spaces.

The top gainers from the F&O segment were SKS Microfinance, Oriental Bank of Commerce and BEML. On the other hand, the top losers were Bata India, Tata Communications and Mahindra & Mahindra Financial Services. In the index options segment, maximum OI was being seen in the 7900-8200 calls and 7500-7900 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.25% and reached 16.73. The 50-share Nifty was up by 58.90 points or 0.75% to settle at 7,942.70. 

Nifty December 2015 futures closed at 7972.20 on Friday at a premium of 29.50 points over spot closing of 7,942.70, while Nifty January 2016 futures ended at 8009.80 at a premium of 67.10 points over spot closing. Nifty December futures saw contraction of 0.05 million (mn) units, taking the total outstanding open interest (OI) to 18.72 million (mn) units. The near month derivatives contract will expire on December 31, 2015.  

From the most active contracts, SBI Bank December 2015 futures traded at a premium of 0.45 points at 250.05 compared with spot closing of 249.60. The number of contracts traded were 17,815.       

ICICI Bank December 2015 futures traded at a discount of 0.10 points at 270.20 compared with spot closing of 270.30. The number of contracts traded were 12,699.    

Bank of Baroda December 2015 futures traded at a premium of 0.60 points at 179.90 compared with spot closing of 179.30. The number of contracts traded were 9,492.        

Axis Bank December 2015 futures traded at a premium of 3.45 points at 474.55 compared with spot closing of 471.10. The number of contracts traded were 20,352.           

Tata Steel December 2015 futures traded at a premium of 0.65 points at 231.85 compared with spot closing of 231.20. The number of contracts traded were 10,185.           

Among Nifty calls, 8100 SP from the December month expiry was the most active call with an addition of 0.24 million open interests.  Among Nifty puts, 7800 SP from the December month expiry was the most active put with an addition of 0.51 million open interests. The maximum OI outstanding for Calls was at 8500 SP (3.55 mn) and that for Puts was at 8000 SP (4.27 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7974.85--- Pivot Point 7927.15--- Support --- 7895.

The Nifty Put Call Ratio (PCR) finally stood at 1.06 for December month contract.  The top five scrips with highest PCR on OI were Apollo Hospitals Enterprise (1.73), Glenmark Pharmaceuticals (1.58), ACC (1.56), GAIL (1.47) and SAIL (1.38).   

Among most active underlying, State Bank of India witnessed an addition of 0.07 million of Open Interest in the December month futures contract, followed by Tata Motors witnessing an addition of 0.42 million of Open Interest in the December month contract; Axis Bank witnessed an addition of 3.32 million of Open Interest in the December month contract, Dr. Reddy's Laboratories witnessed an addition of 0.08 million of Open Interest in the December month contract and Larsen & Toubro witnessed an addition of 0.66 million units of Open Interest in the December month's future contract.