Nifty gains after previous session’s consolidation; ends above 7,750 mark

Erasing the previous session’s losses, CNX Nifty ended the session above its crucial 7,750 level with a gain of about half a percent on emergence of buying by funds and retail investors amid positive cues from other Asian markets. Sentiment on the street also improved after industry body CII has hailed the government's decision to extend validity period of industrial licence to three years, saying that it sends strong signal that the government is committed to enhance the ease of doing business in India. Further, expectations the government is prepared to tackle any crisis related to poor rains and strong global cues after better-than-expected US data and easing oil prices also boosted sentiment. However, there is cautiousness among investors as the World Bank warned that India’s inflation persistently remained uncomfortably high and the new government should avoid fiscal slippages in the process of reviving growth. Healthy buying was observed in Oil & Gas, realty, Power and Bankex sectors, while selling pressure was seen in metal, capital goods and consumer durables scrips.

After gap up opening, nifty unable to sustain its gains, slipped into negative territory in the afternoon session and recovered in the final hour on persistent inflow of foreign funds and widespread buying by retail investors on hopes that the government will take steps to revive the country’s economic growth.

Today’s recovery showed that the market has some more strength and is likely to maintain its upward momentum till the Budget next week. There could be some corrections in-between, but the overall momentum for the market is seen moving northward. Looking at the index options data for July series maximum call OI is seen at 8000 followed by 7800 strike prices whereas maximum put OI is at 7500 & 7400 strike prices suggesting broader range is likely in between 7400-8000 levels. The top gainers from F&O Securities were CESC, Jain Irrigation Systems and Tata Communications. The top losers were ACC, Federal Bank and Glenmark Pharmaceuticals. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session, which shows that traders are buying more options contracts as insurance against declines in the market.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.97% and reached 18.15. The 50-share CNX Nifty increased by 36.80 points or 0.48% to settle at 7,751.60. Nifty July 2014 futures closed at 7782.50 on Friday at a premium of 30.90 points over spot closing of 7,751.60, while Nifty August 2014 futures ended at 7823.70 at a premium of 72.10 points over spot closing. Nifty July futures saw contraction of 0.07 million (mn) units, taking the total outstanding open interest (OI) to 14.27 mn units. The near month derivatives contract will expire on July 31, 2014.

From the most active contracts, Reliance Communications July 2014 futures traded at a premium of 0.90 points at 144.10 compared with spot closing of 143.20. The number of contracts traded were 14,400.

HDFC Bank July 2014 futures traded at a premium of 10.10 points at 866.20 compared with spot closing of 856.10. The number of contracts traded were 17,810.

ONGC July 2014 futures were at a premium of 3.65 points at 425.10 compared with spot closing of 421.45. The number of contracts traded were 15,878.

Reliance Industries July 2014 futures traded at a premium of 5.10 points at 1039.80 compared with spot closing of 1034.70. The number of contracts traded were 44,197.

Tata Motors July 2014 futures were at a discount of 0.25 points at 468.50 compared with spot closing of 468.75. The number of contracts traded were 13,211.

Among Nifty calls, 8000 SP from the July month expiry was the most active call with an addition of 0.40 million open interests. Among Nifty puts, 7,600 SP from the June month expiry was the most active put with a contraction of 0.52 million open interests. The maximum OI outstanding for Calls was at 8000 SP (7.74 mn) and that for Puts was at 7,500 SP (4.61 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7785.97 --- Pivot Point 7723.63 --- Support --- 7689.27.

The Nifty Put Call Ratio (PCR) finally stood at 0.89 for July month contract. The top five scrips with highest PCR on OI were Maruti Suzuki (1.14), UBL (1.13), Just Dial (0.94), SUN TV (0.91) and ACC (0.89).

Among most active underlying, Reliance Industries witnessed an addition of 0.25 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing an addition of 0.32 million of Open Interest in the June  month contract; while ICICI Bank witnessed an addition of 0.53 million of Open Interest in the June month futures contract, Reliance Capital witnessed a contraction 0.05 million of Open Interest in the June month contract and Tata Motors witnessed a contraction of 1.16 million of Open Interest in the June month's future contract.