Nifty extends gains for fourth consecutive session; closes above 7650 level

The fifty stock index -- Nifty -- continued its northward journey for fourth consecutive day on Friday and finished the volatile day of trade with gains of over three tenths of a percent on renewed buying by foreign funds and better-than-expected quarterly earnings from Tata Consultancy Services, India's largest IT services exporter. Sentiment also improved on reports that Foreign direct investment (FDI) in India increased to 8-month high at $3.6 billion in the month of May 2014 as compared to $1.63 billion in the same month of previous year. However, gains were limited as global markets remained under pressure after the downing of a Malaysian airliner at the Ukraine-Russia border, new sanctions on Moscow and unrest in Gaza.

After negative opening, nifty touched its intraday low level in early morning trades on sluggish global cues and geopolitical worries. In late morning trade, nifty started its upward journey and entered into positive territory. However, weak opening in European counterparts extended nervousness in the market and the index dipped back in red in early afternoon trades. Later, the index once again recaptured the green territory as Finance Minister Arun Jaitley in a debate on the Budget said the economy is seeing some signs of recovery but it is too early to say when the economic trend can be reversed.

Trading is expected to be dominated by corporate earnings in the near term, with investors also expected to pay close attention to global factors after a Malaysian plane was shot down in eastern Ukraine, stoking tensions between Russia and the West. In the index option segment, maximum OI continues to be seen in the 8000-7700 calls and 7500-7300 puts indicating the expected trading range. In today's session, the 7700 and 7800 Call strikes saw addition of 1.22 and 1.78 lakh shares, respectively. On the other hand, 7600, 7500 and 7300 Put strikes saw addition of 7.74, 1.20 and 6.00 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.87% and reached 15.09. The 50-share CNX Nifty increased by 23.45 points or 0.31% to settle at 7,663.90. Nifty July 2014 futures closed at 7669.35 on Friday at a premium of 5.45 points over spot closing of 7,663.90, while Nifty August 2014 futures ended at 7705.45 at a premium of 41.55 points over spot closing. Nifty July futures saw an addition of 0.20 million (mn) units, taking the total outstanding open interest (OI) to 15.02 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 1.25 points at 164.75 compared with spot closing of 163.50. The number of contracts traded were 31,112.

HDFC Bank July 2014 futures traded at a premium of 2.20 points at 835.15 compared with spot closing of 832.95. The number of contracts traded were 14,587.

DLF July 2014 futures traded at a premium of 1.30 points at 221.20 compared with spot closing of 219.90. The number of contracts traded were 14,396.

Reliance Industries July 2014 futures traded at a premium of 4.35 points at 979.55 compared with spot closing of 975.20. The number of contracts traded were 21,933.

Tata Steel July 2014 futures traded at a premium of 1.70 points at 564.45 compared with spot closing of 562.75. The number of contracts traded were 24,116.

Among Nifty calls, 7700 SP from the July month expiry was the most active call with a contraction of 0.10 million open interests. Among Nifty puts, 7,600 SP from the June month expiry was the most active put with an addition of 0.73 million open interests. The maximum OI outstanding for Calls was at 8000 SP (8.43 mn) and that for Puts was at 7,500 SP (6.83 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7700.77 --- Pivot Point 7648.13 --- Support --- 7611.27.

The Nifty Put Call Ratio (PCR) finally stood at 0.97 for July month contract. The top five scrips with highest PCR on OI were Just Dial (1.59), ITC (1.39), AXIS Bank (1.02), Kotak Bank (0.99) and Bata India (0.98).

Among most active underlying, Tata Consultancy Services witnessed an addition of 0.10 million of Open Interest in the June month futures contract, followed by Tata Steel witnessing an addition of 0.57 million of Open Interest in the June  month contract; while State Bank of India witnessed an addition of 0.01 million of Open Interest in the June month futures contract, Axis Bank witnessed a contraction 0.28 million of Open Interest in the June month contract and IDFC witnessed an addition of 1.94 million of Open Interest in the June month's future contract.