Bulls continue to show aggression; Nifty ends above 7750 level

Nifty continued its bull run for the fourth straight session and closed the exuberant day of trade with gains of over six tenths of a percent as the wholesale inflation eased to 5-month low of 5.19% in July helped mainly by a moderation in fuel costs. Market sentiments also got some support as Reserve Bank of India (RBI) Governor Raghuram Rajan stated that high interest rate structure may be painful in the short run but will help in long run by containing inflation. Besides, encouraging Q1 earnings, increased FII buying, and positive global cues too bolster investor sentiments. Foreign Portfolio Investors (FPIs) bought shares worth a net Rs 718.27 crore on August 13, 2014. However, a cautious approach adopted by some participants in view of longer weekend, as markets will remain closed tomorrow on account of ‘Independence Day’, limited the gains.

Investors eagerly await the first speech of Prime Minister Narendra Modi on Independence Day. The government already started announcing news for the day with oil minister Dharmendra Pradhan’s decision to cut petrol price by Rs 1.89-2.38/litre.

The top gainers from the F&O segment were Voltas, JSW Steel and India Cements. On the other hand, the top losers were Hero MotoCorp, Hindalco and HDFC. 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. Moreover, India VIX - the gauge of underlying volatility in the market - has lost its positive movement and ended in red, which indicates that traders have slowdown buying options contracts.

Meanwhile, most of sectoral indices on the NSE made positive closing. CNX Metal up by 1.92%, CNX Realty up by 1.84%, CNX Energy up by 1.48%, Bank Nifty up by 1.20% and CNX Pharma up by 1.17% were remained the top gainers in the trade. On the flip side, CNX Media down by 0.23% and CNX IT down by 0.12% were the only losing indices on NSE.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.94% and reached 13.22. The 50-share CNX Nifty increased by 52.15 points or 0.67% to settle at 7,791.70.

Among Nifty calls, 7800 SP from the August month expiry was the most active call with a contraction of 0.09 million open interests. Among Nifty puts, 7,700 SP from the August month expiry was the most active put with an addition of 1.25 million open interests. The maximum OI outstanding for Calls was at 8000 SP (7.27 mn) and that for Puts was at 7,600 SP (7.29 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7812.57 --- Pivot Point 7775.83 --- Support --- 7754.97.

The Nifty Put Call Ratio (PCR) finally stood at 1.25 for August month contract. The top five scrips with highest PCR on OI were M&M (1.56), Kotak Bank (1.44), Sun Pharma (1.41), Maruti Suzuki (1.33) and Ranbaxy (1.25). 

Among most active underlying, Tata Steel witnessed a contraction of 0.48 million of Open Interest in the August month futures contract, followed by State Bank of India witnessing an addition of 0.32 million of Open Interest in the August month contract; while Tata Motors witnessed an addition of 0.40 million of Open Interest in the August month futures contract, Reliance Capital witnessed a contraction 0.31 million of Open Interest in the August month contract and Reliance Capital witnessed an addition of 0.31 million of Open Interest in the August month's future contract.