Nifty extends gain for second consecutive session; closes near 8550 level

The fifty stock index -- Nifty -- continued its northward journey for second consecutive day on Tuesday and finished the day with a gain of over half a percent, as buying activity gathered momentum towards the fag-end on positive global sentiments, with investors expecting Hillary Clinton to emerge victorious in the US election. Sentiments remained optimistic with the report that Retail inflation is expected to soften to 4.1 per cent in October and ease further to sub-4 per cent level by November-December, largely helped by favourable base effect. The report noted that the sequential increase in food index in October was largely led by higher prices of gram pulse, sugar and cooking oil, which were possibly due to increased festival demand for these key ingredients. Some support also came with Finance Minister Arun Jaitley’s statement that the Centre will step up on reforms to attract more investment and fill up infrastructure deficit. He also said that after seven decades of independence, India’s voice is increasingly getting noticed in the world, therefore to reform more, to open more, to attract more investment, to expand more in manufacturing, they need to fill up the infrastructure deficit faster than what they have been doing. Meanwhile, a report has stated that GST benefits are likely to accrue over time rather than immediately, though in the long run the indirect tax regime will boost growth, lower costs and strengthen tax revenues. It added that it expects over time, as the GST council widens the tax net, minimises the tax slabs and lower the standard tax rates, the benefits will be substantial.

On the global front, European markets made firm start and Asian markets ended mostly in green on Tuesday on reports that Democratic presidential candidate Hillary Clinton is most likely to win the US election. Clinton is considered by many investors to be a safer bet than Trump, who is seen as loose cannon with policies many fear could wreck the world's top economy. Back home, after getting a firm start, the local benchmark Nifty showed some strength in early trades, but the sentiments turned pessimistic in noon deals and index drifted into negative territory,  however the market regained its momentum in the final hour of trade and finished the day gaining over half a percent on the index. Traders were seen piling position in Auto, Oil & Gas and Banking stocks, while selling was witnessed in FMCG and Realty sector stocks.

The top gainers from the F&O segment were Crompton Greaves, Lupin and Punjab National Bank. On the other hand, the top losers were Tata Consultancy Services, Tata Motors and Tata Communications. In the index options segment, maximum OI was being seen in the 8600-9000 calls and 8200-8400 puts. In today's session, some traders exited from 8400 and 8500 Call on the back of profit booking. On the other hand, 8500 and 8300 Put strikes saw addition of 3.21 and 2.31 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.59% and reached 16.77. The 50-share Nifty was up by 46.50 points or 0.55% to settle at 8,543.55.

Nifty November 2016 futures closed at 8566.55 on Tuesday at a premium of 23 points over spot closing of 8,543.55, while Nifty December 2016 futures ended at 8615.55 at a premium of 72 points over spot closing. Nifty November futures saw contraction of 0.05 million (mn) units, taking the total outstanding open interest (OI) to 16.02 million (mn) units. The near month derivatives contract will expire on November 24, 2016.

From the most active contracts, Tata Motors November 2016 futures traded at a premium of 2.20 points at 540.70 compared with spot closing of 538.50. The numbers of contracts traded were 25,159.

ICICI Bank November 2016 futures traded at a premium of 1.10 points at 284.50 compared with spot closing of 283.40. The numbers of contracts traded were 26,767.

Vedanta November 2016 futures traded at a discount of 0.15 points at 220.10 compared with spot closing of 220.25. The numbers of contracts traded were 11,860.

Bharat Heavy Electricals November 2016 futures traded at a premium of 1.15 points at 143.85 compared with spot closing of 142.70. The numbers of contracts traded were 15,556.   

Hindalco Industries November 2016 futures traded at a premium of 0.45 points at 168.05 compared with spot closing of 167.60. The numbers of contracts traded were 17,860.

Among Nifty calls, 8600 SP from the November month expiry was the most active call with an addition of 0.09 million open interests. Among Nifty puts, 8500 SP from the November month expiry was the most active put with an addition of 0.78 million open interests. The maximum OI outstanding for Calls was at 9000 SP (6.25 mn) and that for Puts was at 8200 SP (5.11 mn). The respective Support and Resistance levels of Nifty are: Resistance 8575.27--- Pivot Point 8527.68--- Support --- 8495.97.             

The Nifty Put Call Ratio (PCR) finally stood at 0.96 for November month contract. The top five scrips with highest PCR on OI were United Breweries (1.13), Cummins India (1.00), Century Textiles & Industries (0.97), Oil India (0.94) and IndusInd Bank (0.89).   

Among most active underlying ICICI Bank witnessed a contraction of 0.41 million of Open Interest in the November month futures contract, followed Tata Motors witnessing a contraction of 0.95 million of Open Interest in the November month contract, Vedanta witnessed a contraction of 0.42 million of Open Interest in the November month contract, Maruti Suzuki India witnessed an addition of 0.03 million of Open Interest in the November month contract and BHEL witnessed a contraction of 0.59 million units of Open Interest in the November month's future contract.