Bulls continue to show aggression; Nifty ends above 7000 level

Bulls started their run from where they left Friday and snapped the session with another gigantic gain of over two percentage points, conquering its crucial 7,000 mark on anticipation that the exit polls slated for release later today would signal that business-friendly Bharatiya Janata Party winning majority in the general elections. Sentiment also got a boost after India’s trade deficit contracted to $10.01 billion in April as compared to $10.51 billion in the previous month and $17.67 billion reported in the corresponding month of the previous year. However, some investors remained caution ahead of Consumer Price Inflation (CPI) data and Industrial Production data due later in the day, the latest one’s before the RBI’s next monetary policy on June 3, 2014. Healthy buying was observed in Oil & Gas, Power and Auto counters, while defensive stocks such as pharma was under selling pressure as investors bet on high beta cyclicals, which have been the big outperformers this year.

Hopes of a favourable outcome in the elections triggered a renewed speculation in the derivative segment. Option segment witnessed a strong buying out of the money calls and puts suggesting traders bets on a wild move on either upside or downside. In the index option segment, maximum OI continues to be seen in the 7500-7400 calls and 6500-6400 puts indicating this is the trading range expectation. In today's session, the 7300, 7400 and 7500 Call strikes saw addition of 2.45, 4.73 and 16.16 lakh shares, respectively. On the other hand, 6600, 6500 and 6400 Put strikes saw addition of 2.38, 8.44 and 7.28 lakh shares, respectively. India VIX - the gauge of underlying volatility in the market - has declined in today's session after hitting its highest level since March 11, 2009 ahead of exit poll results later in the day. India VIX measures the cost of protection via options and is seen by some investors as a fear gauge.

The top gainers from the F&O Securities were IRB Infrastructure Developers, Coal India and Indian Oil Corporation. The top losers were United Spirits, Hexaware Technologies and UPL. Among the top gainers, IRB Infrastructure Developers futures ended the trade up by 12.80%, extending its rally in past five trading sessions, after the company said it has bagged an Rs 2,300 crore road project in Haryana from National Highways Authority of India (NHAI). While Among the top losers, United Spirits futures ended the trade with a cut of 2.46% after the company agreed to sell its Whyte & Mackay scotch whisky unit to Emperador Inc in a 430 million pound deal.

Most of the sectoral indices on the NSE were settled in the green, CNX Energy up by 3.05%, CNX Media up by 3.00%, CNX Auto up by 2.81%, CNX FMCG up by 2.68%, Bank Nifty up by 2.43%, CNX PSU Bank up by 2.41%, CNX Finance up by 2.19%, CNX Metal up by 1.98%, CNX IT up by 0.93% and CNX Realty up by 0.93% while CNX Pharma declined by 0.89% remained the lone loser in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility declined by 1.59% and reached 37.1050. The 50-share CNX Nifty increased by 155.45 points or 2.27% to settle at 7,014.25.

Nifty May 2014 futures closed at 7,043.05 on Monday at a premium of 28.80 points over spot closing of 7,014.25, while Nifty June 2014 futures ended at 7,059.10 at a premium of 44.85 points over spot closing. Nifty May futures saw an addition of 0.43 million (mn) units, taking the total outstanding open interest (OI) to 14.97 mn units. The near month May 2014 derivatives contract will expire on May 29, 2014.

From the most active contracts, DLF May 2014 futures traded at a premium of 1.00 points at 146.85 compared with spot closing of 145.85. The number of contracts traded was 17,575.

HDFC Bank May 2014 futures traded at a premium of 10.10 points at 802.00 compared with spot closing of 791.90. The number of contracts traded was 26,051.

Reliance Industries May 2014 futures were at a discount of 1.70 points at 1025.30 compared with spot closing of 1027.00. The number of contracts traded was 35,360.

Tata Steel May 2014 futures traded at a premium of 2.15 points at 422.05 compared with spot closing of 419.90. The number of contracts traded was 14,703.

Bank of India May 2014 futures traded at a premium of 2.15 points at 247.15 compared with spot closing of 245.00. The number of contracts traded was 15,870.Among Nifty calls, 7500 SP from the May month expiry was the most active call with an addition of 1.62 million open interest.Among Nifty puts, 7000 SP from the May month expiry was the most active put with an addition of 1.23 million open interest.The maximum OI outstanding for Calls was at 7,000 SP (5.86 mn) and that for Puts was at 6,400 SP (5.98 mn). The respective Support and Resistance levels of Nifty are: Resistance 7068.57--- Pivot Point 6965.73 --- Support --- 6911.42.

The Nifty Put Call Ratio (PCR) finally stood at 0.88 for May month contract. The top five scrips with highest PCR on OI were Hero Moto Corp 1.21, UPL 1.17, Ultra Cement 1.17, Tech Mahindra 1.06, M&M 0.97 and Ranbaxy 0.89.

Among most active underlying, ICICI Bank witnessed addition of 1.14 million of Open Interest in the May month futures contract, followed by SBI witnessing  an addition of 0.09 million of Open Interest in the May  month contract; while HDFC Bank witnessed  an addition  of 0.58 million of Open Interest in the May month futures contract, Reliance Industries witnessed  an addition of 0.22 million of Open Interest in the May month contract and MCDOWELL-N witnessed an addition  of 0.12 million  of Open Interest in the May month's future contract.