Nifty ends above 7,100 mark on exit poll results

Domestic index Nifty, extending its previous session’s gains, snapped the day’s trade above its crucial 7,100 mark with a gain of over a percent. After a positive opening, market started magnifying its gains and conquered its crucial 7,150 mark in afternoon trade. However, profit booking emerged at higher levels and the index started to drift lower in late afternoon trade, but bulls took every dip as opportunity to buy and ended the session with huge gain. The sentiments were on optimistic note from the early trade on exit polls projections of Narendra Modi becoming India's next prime minister, with his opposition party the Bharatiya Janata Party (BJP) and its allies sweeping a parliamentary majority in the world’s biggest-ever election. The BJP-led NDA is projected to win between 249 and 340 seats, according to six exit polls. It needs 272 seats for a simple majority.  Sustained capital inflows by foreign funds at the domestic bourses and widespread buying by retail investors lifted the Nifty to new highs. Moreover, firm global cues coupled with the appreciation in rupee value against the dollar too added to the optimistic sentiments.

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 coming three days. In the index option segment, maximum OI continues to be seen in the 7500-7200 calls and 6500-6400 puts indicating this is the trading range expectation. In today's session, the 7200, 7400 and 7600 Call strikes saw addition of 3.26, 4.89 and 3.11 lakh shares, respectively. On the other hand, 7100, 7000 and 6900 Put strikes saw addition of 5.47, 3.13 and 3.49 lakh shares, respectively. Moreover, India VIX - the gauge of underlying volatility in the market – has declined for second consecutive day as traders turned cautious ahead of the election outcome on May 16, 2014. 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 Jubilant Foodworks, GMR Infrastructure and Adani Enterprises. The top losers were Punjab National Bank, Dr. Reddy's Laboratories and Apollo Tyres. Among the top gainers, Adani Enterprise futures ended the trade up by 10.51%, as exit polls predicted Narendra Modi, BJP's prime ministerial candidate, will comfortably form the new government. While Among the top losers, Punjab National Bank futures ended the trade with a cut of 4.54% after reporting a 28.69% decline in net profit to Rs 806.35 crore for the quarter ended March 31, 2014.

Most of the sectoral indices on the NSE were settled in the green, CNX Realty up by 2.82%, CNX Energy up by 2.81%, CNX IT up by 2.55%, CNX PSU Bank up by 1.67%, CNX FMCG up by 0.86%, CNX Metal up by 0.84%, CNX Auto up by 0.62%, CNX Media up by 0.60%, Bank Nifty up by 0.57% and CNX Finance up by 0.53% while CNX Pharma declined by 0.85% remained the lone loser in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility declined by 13.63% and reached 32.05. The 50-share CNX Nifty increased by 94.50 points or 1.35% to settle at 7,108.75. Nifty May 2014 futures closed at 7,135.30 on Tuesday at a premium of 26.55 points over spot closing of 7,108.75, while Nifty June 2014 futures ended at 7,157.00 at a premium of 48.25 points over spot closing. Nifty May futures saw an addition of 1.03 million (mn) units, taking the total outstanding open interest (OI) to 16.00 mn units. The near month May 2014 derivatives contract will expire on May 29, 2014.

From the most active contracts, BHEL May 2014 futures traded at a discount of 2.00 points at 217.25 compared with spot closing of 219.25. The number of contracts traded was 23,492.

Reliance Industries May 2014 futures were at a discount of 3.10 points at 1058.00 compared with spot closing of 1061.10. The number of contracts traded was 36,282.

Tata Steel May 2014 futures traded at a premium of 4.40 points at 429.90 compared with spot closing of 425.50. The number of contracts traded was 29,648.

Yes Bank May 2014 futures traded at a discount of 6.20 points at 513.70 compared with spot closing of 519.90. The number of contracts traded was 30,801.

Adani Enterprises May 2014 futures traded at a premium of 4.50 points at 480.25 compared with spot closing of 475.75. The number of contracts traded was 42,170.Among Nifty calls, 7500 SP from the May month expiry was the most active call with an addition of 0.08 million open interest. Among Nifty puts, 6400 SP from the May month expiry was the most active put with  contraction of 0.16 million open interest.

The maximum OI outstanding for Calls was at 7,000 SP (5.26 mn) and that for Puts was at 6,400 SP (5.67 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7165.02--- Pivot Point 7116.08 --- Support --- 7059.82.

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 1.87, Ultra Cement Company 1.19, UPL 1.19, Tech Mahindra 1.02 and M&M 1.02.

Among most active underlying, United Spirits witnessed addition of 0.02 million of Open Interest in the May month futures contract, followed by HDFC Bank witnessing  an addition of 0.09 million of Open Interest in the May  month contract; while Reliance Industries witnessed  contraction of 0.08 million of Open Interest in the May month futures contract, State Bank of India  witnessed   contraction of 0.05 million of Open Interest in the May month contract and Aurobindo Pharma witnessed an addition  of 0.71 million  of Open Interest in the May month's future contract.