Nifty extends gain for second consecutive session; closes above 7700 level

The fifty stock index -- Nifty -- continued its northward journey for second consecutive day on Tuesday and finished the excellent day of trade with a massive gain of 101 points or 1.33%, as foreign funds make a strong comeback after some profit taking that had started mid-last week. Besides, firm global cues coupled with the appreciation in rupee value against the dollar added to the optimistic sentiments. Some support also came in after Paris-based think tank Organisation for Economic Cooperation and Development (OECD) stated that Indian economic growth is gaining momentum as Composite leading indicators (CLIs) for India inched up to 99.2 in June from 98.9 in May. Moreover, fresh positions created by participants on expectations of good June IIP numbers later in the day, also acted as a tailwind. IIP data is expected to be strong in the final month of the quarter, as indicated by good core sector data. Investors would be also eyeing combined consumer price index (CPI) data for July 2014 which is expected to rise marginally to 7.40% from 7.31% in June.

After gap up opening, nifty traded in narrow range up till early afternoon of session, but in the final hour of trade Nifty spiked up and touched its day’s high taking support from Positive global cues due to easing geopolitical tensions coupled with positive economy related announcements.

The top gainers from the F&O segment were PTC India, Tata Motors and Gail. On the other hand, the top losers were Jain Irrigation Systems, Divi's Laboratories and Idea Cellular. In the index option segment, maximum OI continues to be seen in the 8000-7800 calls and 7600-7500 puts indicating this is the trading range expectation. Meanwhile, the volatility index (VIX), an indicator of traders' perceptions of near-term risks in the market, declined 3.79% to 13.46, which indicates that market participants expect uncertainty going ahead.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.79% and reached 13.46. The 50-share CNX Nifty increased by 101.10 points or 1.33% to settle at 7,727.05. Nifty August 2014 futures closed at 7,748.25 on Tuesday at a premium of 21.20 points over spot closing of 7,727.05, while Nifty September 2014 futures ended at 7,781.70 at a premium of 54.65 points over spot closing. Nifty August futures saw an addition of 0.34 million (mn) units, taking the total outstanding open interest (OI) to 12.85 mn units. The near month derivatives contract will expire on August 28, 2014.

From the most active contracts, HDFC Bank August 2014 futures traded at a premium of 6.40 points at 812.40 compared with spot closing of 806.00. The number of contracts traded were 12,291.

Reliance Industries August 2014 futures traded at a premium of 6.05 points at 989.80 compared with spot closing of 983.75. The number of contracts traded were 14,643.

Tata Motors August 2014 futures traded at a premium of 3.05 points at 476.35 compared with spot closing of 473.30. The number of contracts traded were 32,725.

Tata Steel August 2014 futures traded at a premium of 2.25 points at 544.50 compared with spot closing of 542.25. The number of contracts traded were 21,601.

Reliance Capital August 2014 futures traded at a premium of 1.20 points at 570.35 compared with spot closing of 569.15. The number of contracts traded were 8,873. Among Nifty calls, 7700 SP from the August month expiry was the most active call with a contraction of 0.68 million open interests. Among Nifty puts, 7,600 SP from the August month expiry was the most active put with an addition of 2.14 million open interests. The maximum OI outstanding for Calls was at 8000 SP (7.00 mn) and that for Puts was at 7,600 SP (7.53 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7756.93--- Pivot Point 7705.87 --- Support --- 7675.98.

The Nifty Put Call Ratio (PCR) finally stood at 1.11 for August month contract. The top five scrips with highest PCR on OI were HDFC (1.73), Kotak Bank (1.43), IDBI (1.43), M&M (1.38) and Maruti Suzuki (1.29).  Among most active underlying, Tata Motors witnessed an addition of 0.66 million of Open Interest in the August month futures contract, followed by Tata Steel witnessing a contraction of 0.19 million of Open Interest in the August month contract; while State Bank of India witnessed an addition of 0.09 million of Open Interest in the August month futures contract, IRB Infrastructure Developers witnessed a contraction 0.13 million of Open Interest in the August month contract and Larsen & Toubro witnessed a contraction of 0.17 million of Open Interest in the August month's future contract.