Bulls continue to show aggression; Nifty ends above 7750 level

Nifty continued its bull run for the sixth straight session and closed the exuberant day of trade with gains of over a percentage point on sustained foreign capital inflows and persistent buying by retail investors, driven by encouraging first quarter earnings posted by blue-chip companies and positive economic factors, including progress in Monsoon. Sentiments also got a boost as Finance Minister Arun Jaitley exuded confidence that tax collection would exceed the set target during the current fiscal. Traders were seen piling up positions in Information Technology (IT), Oil & Gas and Consumer Durables while selling was witnessed in Capital Goods and Power sector stocks. Telecom stocks rose after Idea Cellular's April-June profit beat estimates, while sector regulator's guidelines for mobile phone spectrum sharing also helped sentiment.

Earlier, the benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian markets. The local index later extended its gains and reclaimed its crucial 7,750 mark in afternoon trade as European counters made a firm start with CAC, DAX and FTSE trading with a gain of around a percent in early deals. Moreover, buying in bluechips by overseas investors brought added cheer to the market in the last leg of trade. Finally, market ended the day’s trade with a gain of over a percentage point recapturing its crucial 7,750 level.

Markets will continue to move up gradually on the back of a pick-up in economic indicators, improvement in corporate earnings and strong fund flows, both from domestic and FIIs. In the index option segment, maximum OI continues to be seen in the 8000-7700 calls and 7500-7700 puts indicating the expected trading range. In today's session, some traders exited from 7600, 7700 and 7800 Call on the back of profit booking. On the other hand, 7800, 7700 and 7600 Put strikes saw addition of 9.60, 33.06 and 6.22 lakh shares, respectively.

Meanwhile, India VIX - the gauge of underlying volatility in the market - has declined in today's session. India VIX is normally inversely proportionate to market direction. The top gainers from the F&O segment were Bharti Airtel, Idea Cellular and Exide Industries. The top losers were Unitech, The India Cements and IRB Infrastructure Developers.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.73% and reached 14.64. The 50-share CNX Nifty increased by 83.65 points or 1.09% to settle at 7,767.85. Nifty July 2014 futures closed at 7767.95 on Tuesday at a premium of 0.10 points over spot closing of 7,767.85, while Nifty August 2014 futures ended at 7801.90 at a premium of 34.05 points over spot closing. Nifty July futures saw an addition of 1.38 million (mn) units, taking the total outstanding open interest (OI) to 16.39 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 0.05 points at 135.75 compared with spot closing of 135.70. The number of contracts traded were 16,674.

Idea Cellular July 2014 futures traded at a premium of 0.55 points at 146.95 compared with spot closing of 146.40. The number of contracts traded were 22,656.

Reliance Industries July 2014 futures traded at a premium of 1.15 points at 1031.15 compared with spot closing of 1030.00. The number of contracts traded were 53,252.

Tata Steel July 2014 futures traded at a premium of 1.60 points at 564.10 compared with spot closing of 562.50. The number of contracts traded were 15,142.

Bharti Airtel July 2014 futures traded at a premium of 0.70 points at 354.05 compared with spot closing of 353.35. The number of contracts traded were 15,432. Among Nifty calls, 7800 SP from the July month expiry was the most active call with a contraction of 0.52 million open interests. Among Nifty puts, 7,700 SP from the June month expiry was the most active put with an addition of 3.21 million open interests. The maximum OI outstanding for Calls was at 8000 SP (8.31 mn) and that for Puts was at 7,500 SP (6.89 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7792.87--- Pivot Point 7748.83 --- Support --- 7723.82.

The Nifty Put Call Ratio (PCR) finally stood at 1.09 for July month contract. The top five scrips with highest PCR on OI were Just Dial (1.52), ITC (1.45), Hindalco (1.09), Tata Steel (1.08) and Axis Bank (0.97).

Among most active underlying, Reliance Industries witnessed a contraction of 2.56 million of Open Interest in the June month futures contract, followed by Axis Bank witnessing a contraction of 0.04 million of Open Interest in the June  month contract; while State Bank of India witnessed an addition of 0.06 million of Open Interest in the June month futures contract, Tata Steel witnessed a contraction 0.04 million of Open Interest in the June month contract and Tata Consultancy Services witnessed an addition of 0.09 million of Open Interest in the June month's future contract.