Nifty gains for third consecutive session; closes above 7250

Nifty continued its bull run for third consecutive session and ended the terrific day of trade with a gain of about a percent reclaiming its crucial 7,250 level as sentiments remained buoyant on expectations of continued robust foreign buying in domestic shares following the historic win by the BJP-led NDA in the general elections. After getting a gap-up start, Nifty trimmed some of its gains in the late morning session on account of profit booking in frontline counters. But, in the late trade market turned optimistic and started its north-ward journey on the back of fresh buying by funds and retail investors despite weak Asian cues. Banking, power, capital goods and PSU stocks saw strong buying action as investors sold some of the holdings in defensives like Teck and pharma to move into cyclicals. The market sentiment was supported by data showing that foreign funds remained net buyers of Indian stocks on Friday. Further, Nifty also got boosted after the rupee surged to 58.38 per dollar, its strongest in 11 months on expectations of continued robust foreign buying in domestic shares and debt.

Meanwhile, Nifty is likely to remain range-bound this week and investors' focus will shift to policy announcements from the new government and selection of Cabinet ministers. In today’s session, Nifty options index witnessed broad base selling in both the call and put sides as traders booked profit, while hedgers offloaded their positions as uncertainty over the election result ended. However, in the index option segment, maximum OI to be seen in the 8000-7800 calls and 7100-6900 puts indicating this is the trading range expectation. The movement of India VIX, which crashed 34% to 24.30 on Friday and has corrected another 15% in today’s session, suggest that there will be less volatile times, at least for the immediate future.

The top gainers from the F&O Securities were Jaiprakash Power Ventures, Unitech and GMR Infrastructure. The top losers were Tata Consultancy Services, Dr. Reddy's Laboratories and Infosys. Among the top gainers, Jaiprakash Power Ventures futures ended the trade with a gain of 31.15%, after its board approved for raising funds up to Rs 3000 crore. While Among the top losers, Tata Consultancy Services futures ended the trade with a cut of 6.55% on rupee’s further appreciation fears.

Most of the sectoral indices on the NSE were settled in the green, CNX Media remained the major gainer, up 1.32% followed by CNX PSU Bank up 1.18%, Bank Nifty up by 1.04%, CNX Finance up by 0.80%, CNX Pharma up by 0.41%, CNX Metal up by 0.35%, CNX FMCG up by 0.32% and CNX Auto up by 0.23% while CNX Realty declined by 1.44%, CNX Energy down by 0.42% and CNX IT down by 0.08% remained the lone loser in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 15.08% and reached 20.63. The 50-share CNX Nifty increased by 60.55 points or 0.84% to settle at 7,263.55. Nifty May 2014 futures closed at 7279.90 on Monday at a premium of 16.35 points over spot closing of 7,263.55, while Nifty June 2014 futures ended at 7305.40 at a premium of 41.85 points over spot closing. Nifty May futures saw an addition of 0.35 million (mn) units, taking the total outstanding open interest (OI) to 21.90 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 discount of 0.15 points at 182.85 compared with spot closing of 183.00. The number of contracts traded was 30,636.

NTPC May 2014 futures were at a discount of 1.50 points at 146.10 compared with spot closing of 147.60. The number of contracts traded was 25,913.

BHEL May 2014 futures were at a premium of 1.85 points at 266.85 compared with spot closing of 265.00. The number of contracts traded was 25,749.

Tata Steel May 2014 futures traded at a premium of 2.25 points at 453.20 compared with spot closing of 450.95. The number of contracts traded was 32,703.

ICICI Bank May 2014 futures traded at a premium of 12.25 points at 1477.25 compared with spot closing of 1,465.00. The number of contracts traded was 41,812.

Among Nifty calls, 8,000 SP from the May month expiry was the most active call with contraction of 0.31 million open interest. Among Nifty puts, 7,000 SP from the May month expiry was the most active put with an addition of 0.07 million open interest. 

The maximum OI outstanding for Calls was at 8,000 SP (6.71 mn) and that for Puts was at 7,000 SP (4.89 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7305.25 --- Pivot Point 7249.4--- Support --- 7207.7.  The Nifty Put Call Ratio (PCR) finally stood at 0.76 for May month contract. The top five scrips with highest PCR on OI were Mcleodruss 1.91, Hero Moto Co 1.74, Ultra Cement 1.68, PNB 1.66 and UPL 1.31.

Among most active underlying, United Spirits witnessed contraction of 1.30 million of Open Interest in the May month futures contract, followed by HDFC Bank witnessing  contraction of 0.04 million of Open Interest in the May  month contract; while Reliance Industries witnessed  contraction of 1.20 million of Open Interest in the May month futures contract, SBI witnessed  an addition of 0.21 million of Open Interest in the May month contract and ICICI Bank witnessed an addition  of 2.14 million  of Open Interest in the May month's future contract.