Bullish sentiments help Nifty to reclaim crucial 8,500 mark

After yesterday's global stock markets rout, Indian benchmark -- Nifty -- witnessed recovery on Thursday, ending the session with gain of over a percent, recapturing its crucial 8,500 level, on the back of strong global cues along with buying demand among metal and financial shares. Sentiments got boost after Union Finance Minister Arun Jaitley said tax collections will go up considerably in the medium-to-long term as more people will come under the tax net due to the demonetisation of Rs 500 and Rs 1,000 currency notes. According to him, the step by the government to crack down on black money, terror financing and corruption not merely nudges the economy towards a cashless society but is a significant push in that direction. The move will establish credibility of the Indian economy in the world and will also expand the country’s GDP. Besides, value-buying in bluechip stocks and covering-up by speculators who had created short-positions in yesterday’s trade too supported the rebound. Investors find some comfort after Industry body ASSOCHAM expressed confidence that apprehensions linked to US President elect Donald Trump would certainly prove wrong even as India Inc looks forward to taking bilateral economic engagement to a greater level under the new administration. India Inc can join hands with the Trump Administration in building of the US infrastructure projects.  Meanwhile, banking stocks gained traction as the government’s latest move to curb Rs 500 and Rs 1,000 currency notes augurs well for long-term prospects for the banking industry as they could enjoy higher deposit (savings) balances and transaction volumes, lower cash handling costs and greater acceptance of digital channels.  Metal stocks rose after Donald Trump in his victory speech that he would embark on a project to rebuild infrastructure in the US. He also plans to double US economic growth.

On the global front, Asian shares rallied on Thursday, extending a surprising global recovery as Donald Trump's conciliatory acceptance speech comments helped soothe world financial markets spooked by his unexpected US election victory. European counterparts too appear to be in a sanguine mood as they trade in the positive zone with over half a percent gains. Back home, traders were seen buying in Metal, PSU and Banking stocks, while selling was witnessed in IT and Auto sector stocks.

The top gainers from the F&O segment were Bank of India, Union Bank of India and Punjab National Bank. On the other hand, the top losers were Page Industries, Bharat Financial Inclusion and Mahindra & Mahindra Financial Services. In the index options segment, maximum OI was being seen in the 8300-9000 calls and 8200-8500 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility contraction by 6.99% and reached 15.45. The 50-share Nifty was up by 93.75 points or 1.11% to settle at 8525.75.

Nifty November 2016 futures closed at 8553.35 on Thursday at a premium of 27.60 points over spot closing of 8525.75, while Nifty December 2016 futures ended at 8604.95 at a premium of 79.20 points over spot closing. Nifty November futures saw addition of 0.34 million (mn) units, taking the total outstanding open interest (OI) to 1.70 million (mn) units. The near month derivatives contract will expire on November 24, 2016.

From the most active contracts, State Bank of India November 2016 futures traded at a premium of 0.95 points at 282.30 compared with spot closing of 281.35. The numbers of contracts traded were 41,800.

ICICI Bank November 2016 futures traded at a premium of 0.65 points at 293.80 compared with spot closing of 293.15. The numbers of contracts traded were 23,762.

Punjab National Bank November 2016 futures traded at a premium of 0.75 points at 159.90 compared with spot closing of 159.15. The numbers of contracts traded were 21,520.

Vedanta November 2016 futures traded at a discount of 0.55 points at 229.05 compared with spot closing of 229.60. The numbers of contracts traded were 14,823.

Bank of Baroda November 2016 futures traded at a premium of 0.05 points at 165.25 compared with spot closing of 165.20. The numbers of contracts traded were 14,865.

Among Nifty calls, 8600 SP from the November month expiry was the most active call with an addition of 0.13 million open interests. Among Nifty puts, 8200 SP from the November month expiry was the most active put with an addition of 0.85 million open interests. The maximum OI outstanding for Calls was at 9000 SP (5.75 mn) and that for Puts was at 8200 SP (4.88 mn). The respective Support and Resistance levels of Nifty are: Resistance 8579.23--- Pivot Point 8544.97--- Support --- 8491.48.      

The Nifty Put Call Ratio (PCR) finally stood at 1.01 for November month contract. The top five scrips with highest PCR on OI were UBL (1.12), CUMMINSIND (1), PNB (0.98), YESBANK (0.93) and JSWSTEEL (0.92).   

Among most active underlying State Bank of India witnessed an addition of 1.36 million of Open Interest in the November month futures contract, followed ICICI Bank witnessing an addition of 0.90 million of Open Interest in the November month contract, Punjab National Bank witnessed an addition of 5.16 million of Open Interest in the November month contract, Yes Bank witnessed a contraction of 0.08 million of Open Interest in the November month contract and Vedanta witnessed an addition of 2.63 million units of Open Interest in the November month's future contract.