Nifty gains after previous session’s drubbing

After witnessing some drubbing in the previous session, the domestic 50-share index, Nifty, heaved a sigh of relief garnering marginal gains in Thursday’s trade as investors resumed buying stocks of companies expected to benefit from an economic recovery. The market opened higher on the back of strong global cues, recording intraday high in first half. Sentiments were bullish on hopes that the new government led by Narendra Modi will unleash reforms and take tough decisions to mend India's economy. Afterwards, profit booking emerged at higher levels and the index started to drift lower in the second half. However, some value buying in dying hours helped market to end the session in the green.  Healthy buying was observed in Consumer Durables, Realty and Power counters, while selling pressure was seen in TECK, IT and Auto counters. Moreover, shares of jewellery makers, including Titan Co, Gitanjali Gems, Tribhovandas Bhimji Zaveri and Shree Ganesh Jewellery House, surge after Reserve Bank of India eased gold import and gold metal loan norms.

The market is likely to remain range bound in the near term with positive bias and await the cabinet formation at the centre. In the index option segment, maximum OI to be seen in the 8000-7800 calls and 7100-7000 puts indicating this is the expected trading range. Meanwhile, India VIX - the gauge of underlying volatility in the market - declined for fifth consecutive day as traders turned cautious after Lok Sabha election outcome. The top gainers from F&O Securities were NHPC, DLF and India Cements. The top losers were Hindalco Industries, HDFC and Bharti Airtel.

Most of the sectoral indices on the NSE were settled in the green, CNX Realty up by 5.26%, CNX Metal up by 1.80%, CNX PSU Bank up by 1.62%, CNX Energy up by 1.56%, CNX FMCG up by 1.05%, Bank Nifty up by 0.69%, CNX Finance up by 0.30%, CNX Auto up by 0.15% and CNX Pharma up by 0.05%, while CNX Media up by 0.31% and CNX IT declined by 0.26% remained the losers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 0.41% and reached 17.83. The 50-share CNX Nifty increased by 23.50 points or 0.32% to settle at 7,276.40.Nifty May 2014 futures closed at 7293.70 on Thursday at a premium of 17.30 points over spot closing of 7,276.40, while Nifty June 2014 futures ended at 7315.70 at a premium of 39.30 points over spot closing. Nifty May futures saw contraction of 0.97 million (mn) units, taking the total outstanding open interest (OI) to 21.14 mn units. The near month May 2014 derivatives contract will expire on May 29, 2014.

From the most active contracts, JP Associates May 2014 futures traded at a premium of 0.25 points at 75.30 compared with spot closing of 75.05. The number of contracts traded was 19,012.

NTPC May 2014 futures were at a discount of 1.20 points at 155.10 compared with spot closing of 156.30. The number of contracts traded was 21,210.

DLF May 2014 futures traded at a discount of 1.00 points at 211.20 compared with spot closing of 212.20. The number of contracts traded was 53,846.

SSLT May 2014 futures were at a discount of 1.95 points at 259.30 compared with spot closing of 261.25. The number of contracts traded was 18,011.

Reliance Industries May 2014 futures traded at a premium of 3.50 points at 1106.70 compared with spot closing of 1,103.20. The number of contracts traded was 34,276.  Among Nifty calls, 7,500 SP from the May month expiry was the most active call with contraction of 0.04 million open interest. Among Nifty puts, 7,000 SP from the May month expiry was the most active put with contraction of 0.12 million open interest. The maximum OI outstanding for Calls was at 7,500 SP (5.95 mn) and that for Puts was at 7,000 SP (5.08 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7311.25 --- Pivot Point 7284.7--- Support --- 7249.85.

The Nifty Put Call Ratio (PCR) finally stood at 0.84 for May month contract. The top five scrips with highest PCR on OI were Mcleodruss 1.52, Bank India 1.28, DLF 1.26, PNB 1.24 and Siemens 1.21.

Among most active underlying, United Spirits witnessed  contraction of 0.51 million of Open Interest in the May month futures contract, followed by Reliance Industries  witnessing  contraction  of 0.74 million of Open Interest in the May  month contract; while HDFC Bank witnessed  contraction of 0 .79 million of Open Interest in the May month futures contract, State Bank of India witnessed  contraction 0.09 million of Open Interest in the May month contract and ICICI Bank witnessed  contraction  of 0.11 million  of Open Interest in the May month's future contract.