Nifty gains for third straight day; ends above 7750 mark

The fifty stock index -- Nifty -- extended its gains for the third consecutive trading session on Wednesday on account of strong buying in front line blue chip stocks. Sentiments got some support with Finance Minister Arun Jaitley making a fresh bid to end the deadlock on GST bill and reaching out to main opposition Congress. He hinted that the government is willing to scrap the proposed 1 per cent additional tax levy under the goods and services tax (GST) regime, but ruled out putting the new tax rate under GST in the Constitution amendment bill itself or setting up a dispute resolution panel. Furthermore, Justifying the hike in excise duty on petrol and diesel, Finance Minister Arun Jaitley said for the first time fiscal deficit target will be met without budgetary cuts, as Opposition charged the government with ‘profiteering’ from the fall in global oil prices. On the global front, Asian markets ended in green with Japan’s benchmark Nikkei 225 index and Hong Kong’s Hang Seng gained over two percent each. European shares steadied in early trade, after a choppy start, as investors awaited the outcome of a crucial rate-setting meeting of the U.S. Federal Reserve for clues about the market's near-term direction. The Fed is widely expected to raise the federal funds rate by 25 basis points after the conclusion of a two-day monetary policy meeting today.

Back home, the benchmark got off to a positive start as investors were largely influenced by the supportive leads from Asian markets. The bourse further capitalized on the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. Thereafter, the index kept oscillating in a narrow range through the day’s trade. Sentiments remained optimistic with IMF managing director Christine Lagarde’s statement that early take-off of Goods and Services Tax will help India create more jobs, increase revenue as well as promote domestic manufacturing. However, gains remained capped on the report that exports declined for the 12th month in November, indicating that tepid global demand continues to be a drag on India's economic recovery. Exports fell more than 24 per cent to $20 billion in November, compared with $26.4 billion a year earlier. Besides, government is likely to face a shortfall of Rs 30,000-40,000 crore in direct tax collection this fiscal as the mop-up in first eight months has been just 46.26 per cent of the budgeted target. However, broad-based buying was seen across the board with energy shares leading the rally following a rebound in global crude oil prices from multi-year lows. sugar stocks also edged higher for second straight session after the Lok Sabha passed sugar cess bill which aims at raising cess on sugar from Rs 25 per quintal to Rs 200 per quintal. However, sharp selling was witnessed in some auto stocks like Mahindra and Mahindra (M&M), on the report that Supreme Court (SC) ban registration of diesel vehicles above 2000 cc till March 31, 2016.

The top gainers from the F&O segment were Indraprastha Gas, DLF and Jaiprakash Associates. On the other hand, the top losers were Mahindra & Mahindra, Just Dial and CESC. In the index options segment, maximum OI was being seen in the 7800-8300 calls and 7200-7500 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.54% and reached 16.72. The 50-share Nifty was up by 50 points or 0.65% to settle at 7,750.90. 

Nifty December 2015 futures closed at 7758.20 on Wednesday at a premium of 7.30 points over spot closing of 7,750.90, while Nifty January 2016 futures ended at 7792.65 at a premium of 41.75 points over spot closing. Nifty December futures saw contraction of 0.76 million (mn) units, taking the total outstanding open interest (OI) to 19.50 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 0.40 points at 227.60 compared with spot closing of 227.20. The number of contracts traded were 11,121.      

ICICI Bank December 2015 futures traded at a discount of 1.20 points at 251.50 compared with spot closing of 252.70. The number of contracts traded were 18,640.              

Axis Bank December 2015 futures traded at a premium of 0.70 points at 438.85 compared with spot closing of 438.15. The number of contracts traded were 14,379.            

Tata Steel Industries December 2015 futures traded at a discount of 0.05 points at 245.35 compared with spot closing of 245.40. The number of contracts traded were 8,709.          

Reliance Industries December 2015 futures traded at a premium of 1.15 points at 980.15 compared with spot closing of 979.00. The number of contracts traded were 9,420.                

Among Nifty calls, 8000 SP from the December month expiry was the most active call with an addition of 2.48 million open interests. Among Nifty puts, 7600 SP from the December month expiry was the most active put with an addition of 0.60 million open interests. The maximum OI outstanding for Calls was at 8000 SP (8.72 mn) and that for Puts was at 7500 SP (8.39 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7779.75--- Pivot Point 7747.75--- Support --- 7718.90.

The Nifty Put Call Ratio (PCR) finally stood at 0.87 for December month contract.  The top five scrips with highest PCR on OI were BEML (1.59), Lupin (1.49), HDFC (1.32), KSCL (1.23) and HDFC Bank (1.04).   

Among most active underlying, Tata Motors witnessing a contraction of 0.40 million of Open Interest in the December month contract, followed by ICICI Bank witnessed an addition of 3.12 million of Open Interest in the December month contract, Reliance Industries witnessed a contraction of 0.15 million of Open Interest in the December month contract and Axis Bank witnessed an addition of 0.06 million units of Open Interest in the December month's future contract.