Nifty consolidates after surging two consecutive sessions

The fifty stock index -- Nifty -- ended a range bound session in the positive terrain for third consecutive session as funds and retail investors made selective buying ahead of Q1FY15 earnings of country’s largest exporters, Tata Consultancy Service (TCS). Sentiment on the street got some support from the report that heavy showers have narrowed the monsoon deficit to 36 percent. Further, there were also some positive statements from FIEO, which stated that exports are likely to surge in the coming months on the back of improving demand in overseas countries and measures announced in the Union Budget 2014-15. Shares of infrastructure companies continued to remain in demand, surging by up to 36% in past two trading sessions after the Reserve Bank of India (RBI) eased infrastructure lending and housing loan norms, which can potentially lower the cost of infrastructure funding in the medium to long term.

After a flat opening nifty showed some strength in early morning trades, however it failed to breach the narrow 42-point range for most part of the day, ending the session above its crucial 7,600 mark with a gain of over two tens of a percent.

At present, the market is on a wait and watch mode as some investors believe that the correction is over while some believe that a hefty correction is on its way. In the index option segment, maximum OI continues to be seen in the 8000-7700 calls and 7500-7400 puts indicating this is the trading range expectation. In today's session, the 7700 and 7800 Call strikes saw addition of 11.01 and 1.78 lakh shares, respectively. On the other hand, 7600, 7500 and 7400 Put strikes saw addition of 10.40, 6.41 and 3.99 lakh shares, respectively.

Most of the sectoral indices on the NSE were settled in the green, CNX Metal up by 2.49%, CNX PSU Bank up by 0.94%, CNX Pharma up by 0.40%, CNX FMCG up by 0.39%, CNX Media up by 0.33%, CNX Energy up by 0.12%, CNX IT up by 0.11% and Bank Nifty up by 0.02% while CNX Realty down by 0.59%, CNX Finance down by 0.17% and CNX Auto declined by 0.11% remained the losers in the trade.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 1.60% and reached 14.96. The 50-share CNX Nifty increased by 16.05 points or 0.21% to settle at 7,640.45. Nifty July 2014 futures closed at 7658.75 on Thursday at a premium of 18.30 points over spot closing of 7,640.45, while Nifty August 2014 futures ended at 7696.20 at a premium of 55.75 points over spot closing. Nifty July futures saw an addition of 0.26 million (mn) units, taking the total outstanding open interest (OI) to 14.81 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 premium of 0.80 points at 160.00 compared with spot closing of 159.20. The number of contracts traded were 23,269.

DLF Bank July 2014 futures traded at a premium of 1.45 points at 223.15 compared with spot closing of 221.70. The number of contracts traded were 16,722.

Reliance Industries July 2014 futures traded at a premium of 6.95 points at 987.45 compared with spot closing of 980.50. The number of contracts traded were 25,040.

Crompton Greaves July 2014 futures traded at a premium of 0.60 points at 211.20 compared with spot closing of 210.60. The number of contracts traded were 25,477.

Tata Steel July 2014 futures traded at a premium of 2.20 points at 560.90 compared with spot closing of 558.70. The number of contracts traded were 21,026.

Among Nifty calls, 7700 SP from the July month expiry was the most active call with a contraction of 1.07 million open interests. Among Nifty puts, 7,600 SP from the June month expiry was the most active put with an addition of 0.96 million open interests. The maximum OI outstanding for Calls was at 8000 SP (8.92 mn) and that for Puts was at 7,500 SP (6.71 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7659.83 --- Pivot Point 7636.27 --- Support --- 7616.88.

The Nifty Put Call Ratio (PCR) finally stood at 0.91 for July month contract. The top five scrips with highest PCR on OI were Just Dial (1.63), ITC (1.44), BATA India (1.11), Hindalco (0.98) and Axis Bank (0.94).

Among most active underlying, State Bank of India witnessed a contraction of 0.19 million of Open Interest in the June month futures contract, followed by Tata Steel witnessing an addition of 0.97 million of Open Interest in the June  month contract; while IRB Infrastructure Developers witnessed an addition of 1.88 million of Open Interest in the June month futures contract, Infosys witnessed a contraction 0.03 million of Open Interest in the June month contract and Crompton Greaves witnessed an addition of 0.57 million of Open Interest in the June month's future contract.