Nifty ends at record closing high; above 7800 mark

Extending its winning streak for eighth day in a row, CNX Nifty ended the volatile day of trade at all time closing high levels with domestic bourse surpassing its crucial 7,800 (Nifty) level. The markets had got off to a worrisome start early morning and lost colossal ground through the first half on absence of positive triggers and profit booking in frontline line blue-chip stocks. However, in later half index displayed some recovery on persistent inflow of foreign funds and widespread buying by retail investors on hopes that the government will take steps to revive the country’s economic growth. Sentiments got some support from positive comments of World Bank chief, who expressed confidence that with the Narendra Modi-led Government at the Centre, India’s ranking in ‘Doing Business’ can improve significantly. The Bank also said it would lend India $15-18 billion over the next three years. Besides, India's rainfall deficit has narrowing rapidly to 25% from 36% in seven days as the monsoon maintained its momentum, also bolstered domestic sentiments.

Sectorally, the day was marked by major gains in Metal and banking sector, with CNX Metal gaining 1.50%, while the CNX PSU Banks was up by 1.11% and the Bank Nifty gained 0.46%. CNX IT too gained 0.91%. On the other hand, CNX Media was down by 0.76%, while CNX Energy lost 0.22%. The CNX Midcap and Small cap indices too ended lower by 0.19% and 0.33% respectively.

Nifty is likely to conquer 8000 level in the long term but in the short to medium term, the markets could see a swift correction and then move up. Traders and investors are looking to build bullish bets on large-cap stocks while cutting their exposure in select mid- caps and small-caps. 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 7700-7600 puts indicating the expected trading range. In today's session, some traders exited from 7500, 7600 and 7700 Calls on the back of profit booking. On the other hand, 7900, 7800 and 7700 Puts saw addition of 3.80, 18.35 and 2.32 lakh shares, respectively.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.20% and reached 14.72. The 50-share CNX Nifty increased by 34.85 points or 0.45% to settle at 7,830.60. Nifty July 2014 futures closed at 7833.75 on Thursday at a premium of 3.15 points over spot closing of 7,830.60, while Nifty August 2014 futures ended at 7866.50 at a premium of 35.90 points over spot closing. Nifty July futures saw contraction of 0.37 million (mn) units, taking the total outstanding open interest (OI) to 16.45 mn units. The near month derivatives contract will expire on July 31, 2014.

From the most active contracts, JP Associates July 2014 futures traded at a discount of 0.10 points at 62.20 compared with spot closing of 62.30. The number of contracts traded were 13,853.

IDFC July 2014 futures traded at a premium of 0.20 points at 158.70 compared with spot closing of 158.50. The number of contracts traded were 13,260.

Hindalco Industries July 2014 futures traded at a discount of 0.85 points at 197.95 compared with spot closing of 198.80. The number of contracts traded were 14,488.

Reliance Industries July 2014 futures traded at a premium of 1.55 points at 1040.80 compared with spot closing of 1039.25. The number of contracts traded were 27,519.

Tata Steel July 2014 futures traded at a premium of 1.40 points at 569.35 compared with spot closing of 567.95. The number of contracts traded were 21,752. Among Nifty calls, 7800 SP from the July month expiry was the most active call with an addition of 0.01 million open interests. Among Nifty puts, 7,700 SP from the July month expiry was the most active put with an addition of 0.22 million open interests. The maximum OI outstanding for Calls was at 8000 SP (8.43 mn) and that for Puts was at 7,700 SP (7.22 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7853.62 --- Pivot Point 7812.63 --- Support --- 7789.62.

The Nifty Put Call Ratio (PCR) finally stood at 1.14 for July month contract. The top five scrips with highest PCR on OI were Just Dial (1.71), ITC (1.63), Hindalco (1.47), Asian Paint (1.22) and TCS (1.14).

Among most active underlying, Reliance Capital witnessed a contraction of 0.09 million of Open Interest in the July month futures contract, followed by Tata Steel witnessing a contraction of 0.87 million of Open Interest in the July month contract; while State Bank of India witnessed a contraction of 0.21 million of Open Interest in the July month futures contract, Jaiprakash Associates witnessed a contraction 0.89 million of Open Interest in the July month contract and Reliance Industries witnessed an addition of 1.51 million of Open Interest in the July month's future contract.