Nifty ends above 8200 mark on rate-cut hopes

Making a smart bounce back, Nifty surged with triple digit gains on Wednesday, led by gains in financial stocks after soft inflation and industrial output data stoked hopes of an interest rate cut. Today’s session was more like a rollercoaster ride, where the index opened positive and showed some strength in morning trades, but the sentiments turned pessimistic in late morning trades and index started drifting lower, however the market regained its momentum in the late afternoon trade and finished the day gaining over a percentage point. On the global front, European and Asian shares advanced on Wednesday as expectations of further monetary stimulus in China offset another mixed bag of data from some of the world’s major economies.

Back home, the Indian equity benchmark made a positive start buoyed by a firm trend in other Asian markets. Some support also came with Paris-based think tank OECD saying that India is poised for stable growth even as economic activities are easing in neighbouring and some other developed nations.  The index reclaimed its crucial 8,200 mark in morning session as investors remained hopeful that Reserve Bank of India (RBI) will slash key interest rates as retail inflation softened further to a four-month low of 4.87% in April, compared to 5.25% cent in March. However, the key index suffered a setback in earlier afternoon trades as sudden bouts of profit booking emerged in the local market after global rating agency Moody’s stated that monsoon failure and global financial volatility could pose additional risks to India's growth this year. Besides, some investors remained cautious on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1329.43 crore on May 12, 2015. Overseas investors have sold nearly $2.2 billion worth of cash shares in the last 16 sessions, excluding Japan's Daiichi Sankyo's block sale of Sun Pharmaceutical Industries shares. Thereafter the frontline index slowly but steadily started gathering steam and surged by over a percent by late afternoon trades on account of buying in front line counters and taking cues from European counterparts.  Eventually, Nifty ended the volatile day of trade with a gain of over a percentage point recapturing its crucial 8,200 level.

The top gainers from the F&O segment were Union Bank of India, Adani Enterprises and Jubilant Foodworks. On the other hand, the top losers were Lupin, Ashok Leyland and Hindalco Industries. In the index options segment, maximum OI continues to be seen in the 8600-8500 calls and 8000-8100 puts indicating the expected trading range. Meanwhile, India VIX - the gauge of underlying volatility in the market - has surprisingly rose alongside shares, to as high as 21.4, its highest since 25 February, amid worries on key land, tax reforms and retrospective taxation of foreign investors.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 0.68% and reached 20.68. The 50-share CNX Nifty was up by 108.50 points or 1.34% to settle at 8,235.45.

Nifty May 2015 futures closed at 8250.75 on Wednesday at a premium of 15.30 points over spot closing of 8,235.45, while Nifty June 2015 futures ended at 8,278.35 at a premium of 42.90 points over spot closing. Nifty May futures saw contraction of 0.22 million (mn) units, taking the total outstanding open interest (OI) to 13.86 million (mn) units. The near month derivatives contract will expire on May 28, 2015.

From the most active contracts, Ashok Leyland May 2015 futures traded at a premium of 0.10 points at 69.75 compared with spot closing of 69.65. The number of contracts traded were 23,594.

State Bank of India May 2015 futures traded at a discount of 1.80 points at 272.60 compared with spot closing of 274.40. The number of contracts traded were 25,488.

HDFC Bank May 2015 futures traded at a discount of 0.45 points at 990.80 compared with spot closing of 991.25. The number of contracts traded were 28,312.

ICICI Bank May 2015 futures traded at a premium of 0.20 points at 319.15 compared with spot closing of 318.95. The number of contracts traded were 27,835.

Reliance Industries May 2015 futures traded at a premium of 2.05 points at 887.65 compared with spot closing of 885.60. The number of contracts traded were 32,888Among Nifty calls, 8300 SP from the May month expiry was the most active call with a contraction of 0.74 million open interests. Among Nifty puts, 8000 SP from the May month expiry was the most active put with an addition of 0.10 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.55 mn) and that for Puts was at 8,100 SP (4.71 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8297.00--- Pivot Point 8193.40--- Support --- 8131.85.

The Nifty Put Call Ratio (PCR) finally stood at 1.01 for May month contract. The top five scrips with highest PCR on OI were Eicher Motors (1.64), Hero MotoCorp (1.38), Union Bank (1.23), Dr. Reddys Laboratories (1.11) and Bank of Baroda (1.04). 

Among most active underlying, Axis Bank witnessed a contraction of 0.93 million of Open Interest in the May month futures contract, followed by Lupin witnessing an addition of 0.12 million of Open Interest in the May month contract; Adani Enterprises witnessed an addition of 0.51 million of Open Interest in the May month contract, ICICI Bank witnessed a contraction of 1.75 million of Open Interest in the May month contract and Ashok Leyland witnessed an addition of 1.15 million of Open Interest in the May month's future contract.