Vociferous Nifty gains for second consecutive session; closes above 7400

Continuing its bull run for second consecutive session, Nifty closed the event-loaded and volatile day of trade above the 7,400 level, its highest ever closing, after the RBI at its bi-monthly policy kept key policy rates unchanged and reduced the statutory liquidity ratio by 50 basis points to 22.5%. Some support also came in from reports that foreign institutional investors (FIIs) bought shares worth a net Rs 234.50 crore on June 2, 2014. Metal stocks gained after positive manufacturing data from a private survey in China, the world's biggest consumer and producer of the metal, while FMCG stocks witnessed profit taking on concerns that rising inflation levels would hurt volume growth. 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 as concerned investors gauged the impact of policy decisions. However, market turned optimistic in the late trade and started its north-ward journey on the back of fresh buying by funds and retail investors amid positive global cues. Traders were seen piling up positions in Metal, Realty and PSU stocks, while selling was witnessed in FMCG, Healthcare and Bankex sector stocks.

The market is likely to remain range bound till the new government presents Union budget in July. In the index option segment, maximum OI to be seen in the 7500-7400 calls and 7000-6800 puts indicating the expected trading range between 7000 to 7500. In today's session, the 7500, 7600 and 7700 Call strikes saw addition of 9.89, 8.52 and 3.27 lakh shares, respectively. On the other hand, 7400, 7100 and 7000 Put strikes saw addition of 5.46, 3.79 and 5.13 lakh shares, respectively. Meanwhile, some traders exited from 7200, 7300 and 7400 calls on the back of profit booking. Meanwhile, India VIX - the gauge of underlying volatility in the market -- has lost its positive movement and ended in red as traders turned cautious on RBI’s bi-monthly monetary policy review. The top gainers from F&O Securities were Havells India, Indiabulls Real Estate and Tata Steel. The top losers were Just Dial, Dr. Reddy's Laboratories and Allahabad Bank.

Most of the sectoral indices on the NSE were settled in the green, CNX Metal remained the major gainer, up 4.85% followed by CNX Realty up 3.04%, CNX Energy up by 1.69%, CNX Media up by 1.06%, CNX Auto up by 0.60% and CNX Finance up by 0.35%, while CNX FMCG declined by 0.50%, CNX Pharma down by 0.47%,  CNX PSU Bank down by 0.40%, Bank Nifty down by 0.19% and CNX IT down by 0.06%  remained the only losers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 4.26% and reached 15.79. The 50-share CNX Nifty increased by 53.35 points or 0.72% to settle at 7,415.85. Nifty June 2014 futures closed at 7421.40 on Tuesday at a premium of 5.55 points over spot closing of 7,415.85, while Nifty July 2014 futures ended at 7454.80 at a premium of 38.95 points over spot closing. Nifty June futures saw contraction of 0.65 million (mn) units, taking the total outstanding open interest (OI) to 15.85 mn units. The near month June 2014 derivatives contract will expire on June 26, 2014.

From the most active contracts, Hindalco Industries June 2014 futures were at a premium of 1.50 points at 156.25 compared with spot closing of 154.75. The number of contracts traded was 20,911.

Reliance Communications June 2014 futures were at a premium of 1.25 points at 144.90 compared with spot closing of 143.65. The number of contracts traded was 19,052.

HDFC Bank June 2014 futures traded at a premium of 2.60 points at 825.85 compared with spot closing of 823.25. The number of contracts traded was 23,334.

DLF June 2014 futures were at a premium of 0.85 points at 221.10 compared with spot closing of 220.25. The number of contracts traded was 25,530.

SSLT June 2014 futures traded at a premium of 1.45 points at 298.20 compared with spot closing of 296.75. The number of contracts traded was 19,832.  Among Nifty calls, 7,500 SP from the June month expiry was the most active call with an addition of 0.87 million open interest. Among Nifty puts, 7,300 SP from the  June month expiry was the most active put with an contraction of 0.10 million open interest. The maximum OI outstanding for Calls was at 7,500 SP (5.78 mn) and that for Puts was at 7,000 SP (4.60 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7446.48 --- Pivot Point 7394.32--- Support --- 7363.68.

The Nifty Put Call Ratio (PCR) finally stood at 0.89 for June month contract. The top five scrips with highest PCR on OI were Mcleod Russel India with 1.10, Maruti Suzuki with 0.95, Axis Bank with 0.91, Hero MotoCorp with 0.91, UltraTech Cement with 0.89.

Among most active underlying, Tata Steel witnessed contraction of 0.82 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing contraction of 0.58 million of Open Interest in the June  month contract; while DLF witnessed   an addition of 2.56 million of Open Interest in the June month futures contract, ICICI Bank  witnessed contraction 0.64 million of Open Interest in the June month contract and Sesa Sterlite witnessed contraction of 2.66 million  of Open Interest in the June month's future contract.