Nifty ends at record closing high; above 7750 mark

CNX Nifty after gyrating in a narrow band of thirty seven points finished its second consecutive gaining streak with a gain of 0.46 percent as FICCI's Business Confidence index value climbed to a 14-quarter high of 69 in the current round up from 60.8 in the previous survey. After gap up opening, nifty showed some strength in early morning trades however, it failed to breach the narrow 37-point range for most part of the day, ending the session above its crucial 7,750 mark with a gain of over four tens of a percent. Further, Finance minister Arun Jaitley expressing his discomfort about the high fiscal deficit and the rate of inflation, indicated that populism would take a backseat in the Budget, which led to optimism among market participants.

Meanwhile, Railway-related stocks continued their upward march and trading higher by up to 7% second day in a row ahead of the Railway Budget on July 8, 2014. Further, shares of information technology (IT) companies were in demand on expectation of strong revenue growth from IT major Infosys during the recently (April-June) concluded quarter. On the flip side, Oil and Gas shares continued to dwindle in red after the Oil Minister Dharmendra Pradhan decided not to raise prices of kerosene and LPG. Moreover, FMCG shares including ITC and HUL have dipped on increase in inflation and decline in demand.  

The Nifty began the week on a positive note and hit a fresh all-time higher on hopes that the Narendra Modi-led government will announce a slew of measures to revive economic growth in its first Union Budget on July 10, 2014. Market participants, especially foreign investors, remained extremely optimistic that the new government’s first Budget would provide the much-needed boost to the economy.

Besides, based on the positions built-in, it is clear that the market is poised for more up moves than any major downsides. In the index option segment, maximum OI continues to be seen in the 8000-7800 calls and 7500-7300 puts indicating the trading range expectation. In today's session, the 8000, 8200 and 8300 Call strikes saw addition of 3.07, 3.67 and 4.59 lakh shares, respectively. On the other hand, 7700, 7600 and 7500 Put strikes saw addition of 4.12, 2.79 and 1.44 lakh shares, respectively.

The top gainers from F&O Securities were IDFC, IRB Infrastructure Developers and Sun Pharmaceuticals Industries. The top losers were HDIL, Hindustan Petroleum Corporation and UPL. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session, which indicates that market participants expect uncertainty going ahead. India VIX is normally inversely proportionate to market direction.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 6.89% and reached 19.40. The 50-share CNX Nifty increased by 35.55 points or 0.46% to settle at 7,787.15. Nifty July 2014 futures closed at 7798.60 on Monday at a premium of 11.45 points over spot closing of 7,787.15, while Nifty August 2014 futures ended at 7840.40 at a premium of 53.25 points over spot closing. Nifty July futures saw an addition of 0.08 million (mn) units, taking the total outstanding open interest (OI) to 14.35 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 1.10 points at 140.95 compared with spot closing of 142.05. The number of contracts traded were 35,370.

Reliance Communications July 2014 futures traded at a premium of 0.75 points at 147.25 compared with spot closing of 146.50. The number of contracts traded were 23,518.

HDFC Bank July 2014 futures were at a premium of 10.05 points at 849.70 compared with spot closing of 839.65. The number of contracts traded were 16,887.

Reliance Industries July 2014 futures traded at a premium of 6.00 points at 1031.50 compared with spot closing of 1025.50. The number of contracts traded were 24,367.

ICICI Bank July 2014 futures were at a premium of 7.30 points at 1456.90 compared with spot closing of 1449.60. The number of contracts traded were 15,985.

Among Nifty calls, 8000 SP from the July month expiry was the most active call with an addition of 0.30 million open interests. Among Nifty puts, 7,600 SP from the June month expiry was the most active put with an addition of 0.27 million open interests. The maximum OI outstanding for Calls was at 8000 SP (7.91 mn) and that for Puts was at 7,500 SP (4.70 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7801.07 --- Pivot Point 7778.08 --- Support --- 7764.17.

The Nifty Put Call Ratio (PCR) finally stood at 0.87 for July month contract. The top five scrips with highest PCR on OI were Maruti Suzuki (1.14), UBL (1.04), ITC (0.92), ACC (0.91) and Just Dial (0.87).

Among most active underlying, Kotak Mahindra Bank witnessed an addition of 3.26 million of Open Interest in the June month futures contract, followed by Infosys witnessing a contraction of 0.05 million of Open Interest in the June  month contract; while IDFC witnessed an addition of 4.47 million of Open Interest in the June month futures contract, IRB Infrastructure Developers witnessed an addition 0.95 million of Open Interest in the June month contract and United Spirits witnessed an addition of 0.52 million of Open Interest in the June month's future contract.