Rejuvenated Nifty spurts in last hour of trade; closes above 6800

Opening on a positive note and trading in a small range throughout the day, Nifty extended its previous sessions’ rally as some last-hour jubilation took it to new levels, while finally settling comfortably above the 6800 mark. National Stock Exchange’s broader 50-share CNX Nifty rose on Monday to close at fresh all-time highs, after hitting new all-time highs in intra-day trade. Earlier, the Indian equity market made a decent up move in early trade as lenders such as Axis Bank rallied ahead of their financial results starting later this week, while strong gains in debt markets reduced concerns about potential losses in the sector's bond portfolios. Sentiments finally got a boost after the Supreme Court allowed resumption of mining in Goa, sending shares in miners such as Sesa Sterlite surging.

In today's session, strategists have been creating long strangles in Nifty, buying calls at 6850 and 6900 levels and buying puts at 6800 and 6750 levels as they expecting high volatility in last week of F&O expiry. Moreover, some traders roll over positions in the futures & options (F&O) segment from the near month April 2014 series to May 2014 series. The April 2014 F&O contracts expire on Wednesday as the stock market remains closed on Thursday, on account of voting in Mumbai.

Snapping two consecutive sessions’ losing streak, India VIX - the gauge of underlying volatility in the market - has risen in today's session as traders turned cautious after the benchmark breaches psychological level of 6800. Meanwhile, option writers (sellers) are salivating as rising volatility increases option prices. India VIX has crossed the 34% mark compared to around 14% when NSE launched the trading of futures in the index. Rising VIX levels show traders are buying more options contracts as insurance against declines in the market. The top gainers from the F&O Securities were Biocon, Ashok Leyland and Yes Bank. The top losers were Wipro, Sun TV Network and Hindustan Unilever.

Most of the sectoral indices on the NSE were settled in the green, CNX PSU Bank remained the major gainer, up 2.64% followed by CNX Metal up 2.21%, CNX Auto up by 1.40%, Bank Nifty up by 1.34%, CNX Finance up by 0.90%, CNX Media up by 0.68% and CNX Energy up by 0.09%, while CNX IT declined by 0.64%, CNX Realty down by 0.31%, CNX FMCG down by 0.30% and CNX Pharma down by 0.27%  remained the only losers in the trade.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility surged by 11.44% and reached 34.3850. The 50-share CNX Nifty gained 38.25 points or 0.56% to settle at 6,817.65.

Nifty April 2014 futures closed at 6,838.15 on Monday at a premium of 20.50 points over spot closing of 6,817.65, while Nifty May 2014 futures ended at 6,884.40 at a premium of 66.75 points over spot closing. Nifty April futures saw contraction of 1.05 million (mn) units, taking the total outstanding open interest (OI) to 14.22 mn units. The near month April 2014 derivatives contract will expire on April 23, 2014.

From the most active contracts, BHEL April 2014 futures were at a premium of 0.60 points at 186.60 compared with spot closing of 186.00. The number of contracts traded was 17,608.

SSLT April 2014 futures were at a premium of 2.35 points at 202.10 compared with spot closing of 199.75. The number of contracts traded was 25,332.

HDFC Bank April 2014 futures traded at a premium of 4.60 points at 719.70 compared with spot closing of 715.10. The number of contracts traded was 27,768.

Reliance Industries April 2014 futures traded at a premium of 6.05 points at 963.05 compared with spot closing of 957.00. The number of contracts traded was 23,033.

ICICI Bank April 2014 futures traded at a premium of 7.35 points at 1286.90 compared with spot closing of 1279.55. The number of contracts traded was 27,840.

Among Nifty calls, 6,900 SP from the April month expiry was the most active call with addition of 1.05 million open interest. Among Nifty puts, 6850 SP from the April month expiry was the most active put with addition of 1.10 million open interest.

The maximum OI outstanding for Calls was at 6,900 SP (5.06 mn) and that for Puts was at 6,700 SP (7.05 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6833.10 --- Pivot Point 6810.00 --- Support --- 6794.55.

The Nifty Put Call Ratio (PCR) finally stood at 1.51 for April month contract. The top five scrips with highest PCR on OI were MRF 1.50, Ambuja Cements 1.49, PNB 1.27, BoB 1.02 and Century Textile 0.99.

Among most active underlying, SBI witnessed contraction of 0.99 million of Open Interest in the April month futures contract, followed by L&T witnessing contraction of 1.48 million of Open Interest in the April month contract; HDFC Bank witnessed a contraction of 0.75 million of Open Interest in the April month futures contract. SBI witnessed a contraction of 0.58 million of Open Interest in the April month contract and SSLT witnessed a contraction of 3.70 million of Open Interest in the expiring April month's future contract.