Nifty sheds some gains; ends below 7700 level

The fifty stock index -- Nifty -- continued its northward journey for fifth consecutive day on Monday but could not hold all intraday gains until the end of session. After a gap up opening, nifty showed some strength in early morning trades, but the sentiments turned pessimistic in afternoon trades as European markets failed to open positive. Although nifty managed to trade in green throughout the session, some profit booking in the last hour of the trade took the index below the 7700 mark and ended the session with a gain of mere 20 points. Sentiments got a boost after PHD Chamber of Commerce and Industry stated that the revival of southwest monsoon widened India's growth prospects, with GDP expected at around 5.9 percent for the current financial year. Some support came in from reports that foreign institutional investors (FIIs) bought shares worth a net Rs 574.47 crore on July 18, 2014. Oil and gas stocks were on buyer's radar after Reliance Industries reported encouraging earnings, while some buying was witnessed in public sector stocks after Finance Minister Arun Jaitley stated that the recapitalisation to the tune of Rs 2.4 lakh crore in public sector banks to meet Basel III norms is a high priority item for the government. 

Nifty has managed to gain nearly 1 per cent or just over 72 points so far in this month, largely weighed down by geo-political concerns and profit booking by investors at higher levels. Besides, the only thing holding back the markets at this point seems to be the geopolitical tensions which may impact the markets for the short term. However, anxieties concerning geopolitical tensions surrounding the Israel-Palestine and the Ukraine-Russia conflicts eased slightly as investors shifted their focus to earnings releases and positive merger and acquisition developments.

The build-up of positions in Nifty futures and options contracts suggest that things are getting better despite a few worries about deficient monsoon and geopolitical concerns across the globe. In the index option segment, maximum OI continues to be seen in the 8000-7700 calls and 7500-7600 puts indicating the expected trading range. In today's session, the 7800 and 7900 Call strikes saw addition of 2.40 and 6.11 lakh shares, respectively. On the other hand, 7600, 7500 and 7300 Put strikes saw addition of 11.46, 2.59 and 1.95 lakh shares, respectively. 

Meanwhile, Put-call ratio (PCR), based on open interest of Nifty, moved up sharply from 0.65 to 0.99 to near July's high levels. Rising PCR with falling volatility indicates bears are relaxing their grip over the market. The top gainers from the F&O Securities were Century Textiles & Industries, Sun TV Network and Bata India. The top losers were HDIL, Canara Bank and DLF. 

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.31% and reached 14.89. The 50-share CNX Nifty increased by 20.30 points or 0.26% to settle at 7,684.20. Nifty July 2014 futures closed at 7686.20 on Monday at a premium of 2.00 points over spot closing of 7,684.20, while Nifty August 2014 futures ended at 7724.95 at a premium of 40.75 points over spot closing. Nifty July futures saw contraction of 0.01 million (mn) units, taking the total outstanding open interest (OI) to 15.00 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 0.55 points at 161.25 compared with spot closing of 160.70. The number of contracts traded were 15,042.

HDFC Bank July 2014 futures traded at a premium of 3.05 points at 829.55 compared with spot closing of 826.50. The number of contracts traded were 19,502.

Reliance Industries July 2014 futures traded at a premium of 2.45 points at 998.45 compared with spot closing of 996.00. The number of contracts traded were 37,211.

Tata Steel July 2014 futures traded at a premium of 1.40 points at 563.80 compared with spot closing of 562.40. The number of contracts traded were 13,221.

Reliance Capital July 2014 futures traded at a premium of 1.60 points at 601.70 compared with spot closing of 600.10. The number of contracts traded were 14,190.

Among Nifty calls, 7700 SP from the July month expiry was the most active call with a contraction of 0.17 million open interests. Among Nifty puts, 7,600 SP from the June month expiry was the most active put with an addition of 0.98 million open interests. The maximum OI outstanding for Calls was at 8000 SP (8.32 mn) and that for Puts was at 7,500 SP (7.08 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7712.87 --- Pivot Point 7693.43 --- Support --- 7664.77.

The Nifty Put Call Ratio (PCR) finally stood at 0.99 for July month contract. The top five scrips with highest PCR on OI were Just Dial (1.50), ITC (1.43), AXIS Bank (1.06), Tata Steel (0.91) and Hindalco (0.89).

Among most active underlying, Reliance Industries witnessed a contraction of 0.91 million of Open Interest in the June month futures contract, followed by State Bank of India witnessing an addition of 0.13 million of Open Interest in the June  month contract; while Axis Bank witnessed a contraction of 0.09 million of Open Interest in the June month futures contract, Century Textiles & Industries witnessed an addition 1.12 million of Open Interest in the June month contract and Tata Steel witnessed a contraction of 0.14 million of Open Interest in the June month's future contract.