Nifty gains after previous session’s drubbing; ends tad below 7,900 mark

After witnessing some drubbing in the previous session, domestic index Nifty once again showing persistence ended positive with marginal gains in Thursday’s trade as investors resumed buying stocks of companies expected to benefit from an economic recovery. Finance Secretary Arvind Mayaram stated that the country's economy will expand around 5.8% in the current fiscal, asserting belief that the economy would recover strongly this year. Besides, reports of foreign funds remaining buyers in yesterday’s trade on the Indian bourses supported the recovery. Moreover, some respite came in on long pending GST, as the state Finance Ministers resolved to lower the threshold limit for imposing Goods and Service Tax (GST) from Rs 25 lakh to Rs 10 lakh, and asked the Centre to include the provision for GST compensation in the Constitutional Amendment Bill.  Banking shares mainly public sector undertakings (PSU) were trading higher on reports that the Finance ministry will take tough measures on rising scams in state-owned banks, while State-run oil marketing companies also gained on the back of weak crude prices. On the other hand, Metal shares were trading lower after the government gave its approval to raise the royalty rates on minerals, including iron ore and bauxite.

After a negative opening, nifty showed some strength in morning trades, but the sentiments turned pessimistic in late afternoon trades and index start drifting lower, however the market regained its momentum in the final hour of trade and finished the day gaining two tenths of a percent on the index.

The market is gaining strength amid hopes that the new BJP-led government would soon take some important pro-business measures to boost the economy. Meanwhile, the top gainers from the F&O segment were Union Bank, Titan Industries and Hind Petro. On the other hand, the top losers were Unitech, Indiabulls Real Estate and SAIL. In the index option segment, maximum OI continues to be seen in the 8000-7900 calls and 7700-7800 puts indicating the expected trading range. Meanwhile, India VIX - the gauge of underlying volatility in the market - has risen in today's session as traders turned cautious after the benchmark breaches psychological level of 7900. 

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.53% and reached 13.73. The 50-share CNX Nifty increased by 15.80 points or 0.20% to settle at 7,891.10. Nifty August 2014 futures closed at 7903.15 on Thursday at a premium of 12.05 points over spot closing of 7,891.10, while Nifty September 2014 futures ended at 7936.50 at a premium of 45.40 points over spot closing. Nifty August futures saw contraction of 0.38 million (mn) units, taking the total outstanding open interest (OI) to 14.68 mn units. The near month derivatives contract will expire on August 28, 2014.

From the most active contracts, State Bank of India August 2014 futures traded at a discount of 1.20 points at 2469.80 compared with spot closing of 2,471.00. The number of contracts traded were 48,293.

ICICI Bank August 2014 futures traded at a discount of 1.35 points at 1543.55 compared with spot closing of 1,544.90. The number of contracts traded were 22,501.

HDFC Bank August 2014 futures traded at a discount of 0.45 points at 834.45 compared with spot closing of 834.90. The number of contracts traded were 16,503.

United Spirits August 2014 futures traded at a premium of 16.10 points at 2403.10 compared with spot closing of 2,387.00. The number of contracts traded were 22,088.

Larsen & Toubro August 2014 futures traded at a premium of 0.45 points at 1533.85compared with spot closing of 1,533.40. The number of contracts traded were 12,593.  Among Nifty calls, 8000 SP from the August month expiry was the most active call with an addition of 0.44 million open interests. Among Nifty puts, 7,900 SP from the August month expiry was the most active put with a contraction of 0.34 million open interests. The maximum OI outstanding for Calls was at 8000 SP (9.36 mn) and that for Puts was at 7,700 SP (7.66 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7921.85 --- Pivot Point 7888.90 --- Support --- 7858.15.

The Nifty Put Call Ratio (PCR) finally stood at 1.30 for August month contract. The top five scrips with highest PCR on OI were Kotak Bank (1.70), M&M (1.73), Maruti Suzuki (1.66), Cipla (1.47) and Tata Motors (1.35). 

Among most active underlying, State Bank of India witnessed a contraction of 0.26 million of Open Interest in the August month futures contract, followed by Tata Steel witnessing a contraction of 0.40 million of Open Interest in the August month contract; while ICICI Bank witnessed a contraction of 0.04 million of Open Interest in the August month futures contract, United Spirits witnessed a contraction 0.52 million of Open Interest in the August month contract and Reliance Industries witnessed an addition of 0.27 million of Open Interest in the August month's future contract.