Nifty ends flat above 7100 level

The local benchmark, Nifty consolidated and ended the choppy day of trade on a flat note on Wednesday. The index opened in the green on hopes that the BJP-led NDA is set to form a stable government, recording intraday high in late morning session. Afterwards, profit booking emerged at higher levels and the index started to drift lower till early noon. Market, for rest of the session, traded in the tight range as investors remained sideways in the absence of any significant trigger at domestic front. However, some buying in dying hours helped market to end the session flat, recapturing its crucial 7,100 mark. Investor sentiment was subdued in today's session as Organisation for Economic Cooperation and Development saying that India, China and other major emerging economies are expected to see weak growth even as momentum remains stable in the developed world. Moreover, India reported a contraction in its industrial output in March while its inflation accelerated in April, the latest indications that Indian economy is still struggling with signs of stagflation too weighed down some sentiments.

For the short term, Nifty Futures and Options may witness high volatility on the back of election outcome on May 16, 2014. Traders were advised to maintain proper stop-loss mechanism for trading, while investors should hedge long portfolio with options strategies. In the index option segment, maximum OI concentration was seen in a wider range at 7500 strike price for call option, indicating it as resistance, and for put option, it is seen at 6400 strike price, suggesting this level as support for the market. In today's session, the 7300, 7500 and 7700 Call strikes saw addition of 4.93, 4.19 and 3.57 lakh shares, respectively. On the other hand, 6900, 6700 and 6600 Put strikes saw addition of 7.16, 7.49 and 3.06 lakh shares, respectively. Meanwhile, some strategists have been creating long strangles in Nifty, buying calls at 7500 and 7700 levels and buying puts at 6700 and 6500 levels as they are expecting high volatility this week.

The top gainers from the F&O Securities were Canara Bank, Bank of Baroda and Union Bank of India. The top losers were Mahindra & Mahindra, Dr. Reddy's Laboratories and Adani Ports. Among the top gainers, Bank of Baroda futures ended the trade with a gain of 9.58%, after reporting a strong 12% y-o-y jump in net profit at Rs 1157.27 crore for Q4 FY14. While Among the top losers, Dr. Reddy's Laboratories futures ended the trade with a cut of 3.51% after reporting a 15.64% decline in consolidated net profit to Rs 481.60 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 4.22%, CNX PSU Bank up by 3.32%, CNX Metal up by 3.27%, CNX FMCG up by 0.91%, Bank Nifty up by 0.29% and CNX Media up by 0.29% while CNX Energy down by 0.73%, CNX Pharma down by 0.43%, CNX Finance down by 0.33%, CNX IT down by 0.16% and CNX Auto down by 0.08% were the losers on the NSE sectoral indices.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.16% and reached 32.42. The 50-share CNX Nifty ended flat at 7,108.75. Nifty May 2014 futures closed at 7,141.05 on Wednesday at a premium of 32.30 points over spot closing of 7,108.75, while Nifty June 2014 futures ended at 7,161.40 at a premium of 52.65 points over spot closing. Nifty May futures saw an addition of 1.01 million (mn) units, taking the total outstanding open interest (OI) to 17.02 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 0.45 points at 161.10 compared with spot closing of 160.65. The number of contracts traded was 22,677.

Reliance Industries May 2014 futures were at a discount of 2.50 points at 1042.40 compared with spot closing of 1044.90. The number of contracts traded was 25,249.

Tata Steel May 2014 futures traded at a premium of 2.40 points at 454.90 compared with spot closing of 452.50. The number of contracts traded was 33,504.

Reliance Capital May 2014 futures traded at a premium of 0.30 points at 415.30 compared with spot closing of 415.00. The number of contracts traded was 22,867.

Bank of India May 2014 futures traded at a premium of 0.55 points at 273.55 compared with spot closing of 273.00. The number of contracts traded was 25,423.Among Nifty calls, 7500 SP from the May month expiry was the most active call with contraction of 0.02 million open interest. Among Nifty puts, 6400 SP from the May month expiry was the most active put with  contraction of 0.56 million open interest.

The maximum OI outstanding for Calls was at 7,500 SP (5.23 mn) and that for Puts was at 6,400 SP (5.10 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7140.37--- Pivot Point 7110.63 --- Support --- 7079.02.

The Nifty Put Call Ratio (PCR) finally stood at 0.86 for May month contract. The top five scrips with highest PCR on OI were Mcleodruss 2.05, Hero Moto Co 1.88, UPL 1.20, Tech Mahindra 1.19 and Ultra Cement 1.09.

Among most active underlying, United Spirits witnessed addition of 0.12 million of Open Interest in the May month futures contract, followed by HDFC Bank witnessing  an addition of 0.98 million of Open Interest in the May  month contract; while Reliance Industries witnessed  an addition of 0.40 million of Open Interest in the May month futures contract, State Bank of India  witnessed  an addition of 0.74 million of Open Interest in the May month contract and Reliance Industries witnessed an addition  of 0.40 million  of Open Interest in the May month's future contract.