Nifty gains after previous session’s consolidation; ends at 7,650 mark

Taking cues from the consolidation in previous two sessions, and opening the session on a cautious note, Nifty witnessed a grand tussle between the bulls and the bears throughout the day but closed in the positive territory taking home gains of around three tenths of a percent. Sentiments got some support from International Monetary Fund (IMF)’s report, which projects the Indian economy recovering to potential growth 6.75%-7%. However, there was some cautiousness among investors about major economic data such as industrial production (IIP) and consumer inflation (CPI) to be announced after the market hours. The markets got off to a cautious but positive start and lost some ground in early morning trade on absence of positive triggers and profit booking in frontline line blue-chip stocks. However, in later deals the index started showing recovery on persistent inflow of foreign funds and widespread buying by retail investors on hopes that the new government will take steps to revive the country’s economic growth. Stocks from Healthcare, Auto and FMCG counters were supporting the markets’ uptrend, while those from PSU, Teck and Consumer Durables counters were adding to the underlying cautious undertone. 

Looking at the option data for June series maximum call OI is seen at 8000 followed by 7800 strike prices whereas maximum put OI is at 7500 & 7600 strike prices suggesting broader range is likely in between 7500-8000 levels. The traders looking for non-directional cover would take a long 7,800c (32.10) and long 7,500p (28.85) combined with a short 7,400p (15.50) and short 7,900c (14.20). This long-short strangle combination has a maximum cost of 32 and maximum returns of 68. In the stock options segment, many traders and hedgers have added position in Infosys after appointing former SAP executive Vishal Sikka as the CEO and MD of the company.

The top gainers from the F&O Securities were Biocon, Godrej Industries and Hindalco Industries. The top losers were Bharti Airtel, Housing Development and Infrastructure and India Cements. Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session, which indicates that traders have slowdown buying options contracts. 

Most of the sectoral indices on the NSE were settled in the green, CNX Pharma up by 1.26%, CNX Auto up by 0.76%, CNX Finance up by 0.61%, CNX FMCG up by 0.44%, CNX Metal up by 0.30%, CNX Realty up by 0.20%, CNX IT up by 0.12% and Bank Nifty up by 0.09%, while CNX Media down by 1.63%, CNX PSU Bank declined by 0.37% and CNX Energy down by 0.07%, remained the losers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 0.92% and reached 16.90. The 50-share CNX Nifty increased by 23.05 points or 0.30% to settle at 7,649.90. Nifty June 2014 futures closed at 7664.65 on Thursday at a premium of 14.75 points over spot closing of 7,649.90, while Nifty July 2014 futures ended at 7696.85 at a premium of 46.95 points over spot closing. Nifty June futures saw an addition of 0.60 million (mn) units, taking the total outstanding open interest (OI) to 16.69 mn units. The near month June 2014 derivatives contract will expire on June 26, 2014.

From the most active contracts, HDFC Bank June 2014 futures were at a premium of 4.85 points at 845.75 compared with spot closing of 840.90. The number of contracts traded was 26,812.

DLF June 2014 futures traded at a discount of 0.50 points at 224.30 compared with spot closing of 224.80. The number of contracts traded was 13,735.

ONGC June 2014 futures were at a premium of 1.50 points at 431.05 compared with spot closing of 429.55. The number of contracts traded was 14,046.

Reliance Industries June 2014 futures were at a premium of 3.50 points at 1099.20 compared with spot closing of 1095.70. The number of contracts traded was 22,669.

ICICI Bank June 2014 futures traded at a premium of 4.90 points at 1466.70 compared with spot closing of 1461.80. The number of contracts traded was 19,995. Among Nifty calls, 7,700 SP from the June month expiry was the most active call with contraction of 0.40 million open interest. Among Nifty puts, 7,600 SP from the  June month expiry was the most active put with an addition of 0.39 million open interest. The maximum OI outstanding for Calls was at 8000 SP (5.81 mn) and that for Puts was at 7,500 SP (5.52 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7674.00 --- Pivot Point 7633.90 --- Support --- 7609.80.

The Nifty Put Call Ratio (PCR) finally stood at 1.06 for June month contract. The top five scrips with highest PCR on OI were Mcleod Russel India (1.54), Hero MotoCorp (1.32), Aurobindo Pharma (1.14), Maruti Suzuki (1.01) and Tata Steel (0.98).

Among most active underlying, Infosys witnessed an addition of 0.15 million of Open Interest in the June month futures contract, followed by HDFC Bank witnessing an addition of 1.05 million of Open Interest in the June  month contract; while State Bank of India witnessed contraction of 0.18 million of Open Interest in the June month futures contract, Tata Steel witnessed an addition 0.28 million of Open Interest in the June month contract and Reliance Industries witnessed contraction of 0.10 million  of Open Interest in the June month's future contract.