Nifty ends higher ahead of US Fed meet

The fifty stock index -- Nifty – ended higher on Tuesday on account of short coverings and value buying in front line blue chip stocks. The sentiments got some support with the report of global rating agency Fitch stating that India will continue to post good growth despite subdued prospect for the Asia Pacific region amid an expected rise in US rates, dollar strength and lower commodity prices. On the global front, Asian markets closed mostly in red as investors were reluctant to make any big moves amid volatile crude oil and before a widely anticipated US interest rate increase by the Federal Reserve later this week.  Investors also remained focused on whether the People's Bank of China (PBOC) would continue to guide its currency lower, with traders wary about the central bank's intentions after it set the yuan/dollar official midpoint at 4-1/2-year lows in recent session. However, European markets were strong with the France's CAC, Germany's DAX and Britain's FTSE rising between 1.5-2 percent as gains in major French companies propped up the region's equity markets.

Back home, the benchmark Nifty got off to a positive start as investors were largely influenced by the supportive leads from Asian markets. However, the index dropped into the red terrain sooner than later, as market participants turned cautious ahead of the two-day FOMC meet in which the US Federal Reserve is widely expected to raise interest rates. Sentiments remained down-beat on the report that retail inflation rose to 5.41 per cent in November, 4th straight month of uptick as prices of vegetables, pulses and fruits went up further to push the rate of price rise above the Reserve Bank’s comfort level. Thereafter, market, for most of the session, see-saw around the neutral line as investors remained sideways in the absence of any significant trigger at domestic front. However, in the second half, market pared its losses and turned positive on account of buying in front line counters and taking cues from European counterparts. Market extended its gains till the end of session on account of buying in Auto, Energy and FMCG stocks. Finally, Nifty ended the session at its intra-day high level with a gain of 50 points.

The top gainers from the F&O segment were Indiabulls Real Estate, Just Dial and Adani Enterprises. On the other hand, the top losers were Tech Mahindra, Dish TV India and Punjab National Bank. In the index options segment, maximum OI was being seen in the 7800-8300 calls and 7200-7600 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 2.56% and reached 17.34. The 50-share Nifty was up by 50.85 points or 0.66% to settle at 7,700.90. 

Nifty December 2015 futures closed at 7709.40 on Tuesday at a premium of 8.50 points over spot closing of 7,700.90, while Nifty January 2016 futures ended at 7743.70 at a premium of 42.80 points over spot closing. Nifty December futures saw addition of 0.43 million (mn) units, taking the total outstanding open interest (OI) to 20.26 million (mn) units. The near month derivatives contract will expire on December 31, 2015.           

From the most active contracts, SBI December 2015 futures traded at a premium of 0.65 points at 226.65 compared with spot closing of 226.00. The number of contracts traded were 8,898.      

ICICI Bank December 2015 futures traded at a premium of 1.00 points at 246.70 compared with spot closing of 245.70. The number of contracts traded were 13,597.             

Axis Bank December 2015 futures traded at a premium of 2.80 points at 437.05 compared with spot closing of 434.25. The number of contracts traded were 12,413.            

Tata Motors Industries December 2015 futures traded at a premium of 1.65 points at 380.75 compared with spot closing of 379.10. The number of contracts traded were 12,236.          

Reliance Industries December 2015 futures traded at a premium of 1.70 points at 977.70 compared with spot closing of 976.00. The number of contracts traded were 12,049.                

Among Nifty calls, 7800 SP from the December month expiry was the most active call with a contraction of 0.06 million open interests. Among Nifty puts, 7600 SP from the December month expiry was the most active put with an addition of 0.35 million open interests. The maximum OI outstanding for Calls was at 8000 SP (6.52 mn) and that for Puts was at 7500 SP (8.29 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7728.90 --- Pivot Point 7677.00 --- Support --- 7649.00.

The Nifty Put Call Ratio (PCR) finally stood at 0.88 for December month contract.  The top five scrips with highest PCR on OI were BEML (1.63), Lupin (1.31), KSCL (1.11), ACC (1.04) and UCO Bank (1.03).   

Among most active underlying, Reliance Industries witnessed an addition of 0.84 million of Open Interest in the December month futures contract, followed by Tata Motors witnessing an addition of 2.24 million of Open Interest in the December month contract; Maruti Suzuki India witnessed an addition of 0.06 million of Open Interest in the December month contract, ICICI Bank witnessed an addition of 3.91 million of Open Interest in the December month contract and Axis Bank witnessed an addition of 0.95 million units of Open Interest in the December month's future contract.