Bulls continue to show aggression; Nifty ends above 7600 level

Nifty continued its bull run for second straight session and ended a terrific day of trade with gains of over one percent reclaiming its crucial 7,600 level as sentiments remained buoyant on hopes that the reform measures in next week’s Union Budget will boost India’s economic growth. Moreover, firm global cues coupled with the appreciation in rupee value against the dollar too added to the optimistic sentiments. Some support also came after the Business Outlook Survey by the Confederation of Indian Industry (CII), reported that the Indian industry is upbeat on its growth prospects after the new government took charge at the centre. However, a delayed monsoon has led to some concerns this year and investors fear this might cause a drop in agricultural output and push prices higher.

After making a gap-up start, Nifty continued its north-ward journey supported by heavy buying in financials, infra and power shares amid strong global cues. Afterwards, the local index extended its gains and conquered its crucial 7,600 mark in late afternoon session as sustained buying was witnessed mostly in key heavyweights. However, Nifty trimmed some of its gains in final half hour of trade on account of profit booking in some frontline counters. Banking stocks led the gains with Bank Nifty rising nearly 1.7 per cent to 15,241, while strong buying was also seen in capital goods, healthcare and power stocks.

Option segment witnessed a strong buying out of the money calls and puts suggesting traders bets on a wild move on either upside or downside in coming three days. In the index option segment, maximum OI continues to be seen in the 8000-7800 calls and 7000-7300 puts indicating this is the trading range expectation. In today's session, the 7700, 7800 and 7900 Call strikes saw addition of 2.12, 7.84 and 7.86 lakh shares, respectively. On the other hand, 7600, 7500 and 7400 Put strikes saw addition of 2.41, 6.52 and 5.84 lakh shares, respectively.

The top gainers from the F&O Securities were Syndicate Bank, Allahabad Bank and Jaiprakash Power Ventures. The top losers were United Spirits, Just Dial and Tata Motors. Moreover, India VIX - the gauge of underlying volatility in the market - has risen in today's session as traders turned cautious ahead of next week’s Union Budget. India VIX measures the cost of protection via options and is seen by some investors as a fear gauge.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.37% and reached 7,611.35. The 50-share CNX Nifty increased by 102.55 points or 0.21% to settle at 7,508.80. Nifty July 2014 futures closed at 7634.35 on Monday at a premium of 23.00 points over spot closing of 7,611.35, while Nifty August 2014 futures ended at 7669.05 at a premium of 57.70 points over spot closing. Nifty July futures saw contraction of 0.07 million (mn) units, taking the total outstanding open interest (OI) to 13.97 mn units. The near month derivatives contract will expire on July 31, 2014.

From the most active contracts, IDFC July 2014 futures traded at a discount of 1.35 points at 133.80 compared with spot closing of 135.15. The number of contracts traded were 22,627.

ONGC July 2014 futures traded at a premium of 2.95 points at 427.45 compared with spot closing of 424.50. The number of contracts traded were 12,837.

Reliance Industries July 2014 futures traded at a premium of 11.45 points at 1025.05 compared with spot closing of 1013.60. The number of contracts traded were 38,851.

Bank of India July 2014 futures were at a premium of 2.75 points at 304.35 compared with spot closing of 301.60. The number of contracts traded were 12,701.Among Nifty calls, 7800 SP from the July month expiry was the most active call with an addition of 0.68 million open interests. Among Nifty puts, 7,400 SP from the June month expiry was the most active put with an addition of 0.35 million open interests. The maximum OI outstanding for Calls was at 8000 SP (6.11 mn) and that for Puts was at 7,000 SP (3.63 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7646.13 --- Pivot Point 7588.87 --- Support --- 7554.08.

The Nifty Put Call Ratio (PCR) finally stood at 0.90 for July month contract. The top five scrips with highest PCR on OI were ACC (1.09), Gail (1.05), SRTRANSFIN (1), Just Dial (0.99) and MCLEODRUSS (0.88).

Among most active underlying, Reliance Industries witnessed an addition of 0.96 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing an addition of 0.24 million of Open Interest in the June  month contract; while United Spirits witnessed a contraction of 0.68 million of Open Interest in the June month futures contract, Larsen & Toubro witnessed a contraction 0.13 million of Open Interest in the June month contract and Reliance Capital witnessed an addition of 0.40 million of Open Interest in the June month's future contract.