Nifty reclaims its crucial 8,250 level

The benchmark Nifty rose on Friday, led by lenders such as State Bank of India after the government defended its reforms approach and on continued hopes the Reserve Bank would lower interest rates in June. On the global front, Asian stocks settled mixed, as the big markets in Japan and Hong Kong got a lift from the rebound on Wall Street, but weak data dragged Chinese shares lower. Besides, some investors awaited more US data later in the session for clues on the timing of the US Federal Reserve’s interest rate hike. European stocks edged higher after overnight rally on us markets and further signs that stability was returning to bond markets after a recent rout.

Back home, the Indian equity benchmark Nifty opened on a positive note and traded in a 70-point range and remained mostly in green on sustained buying activities by both funds and retail investors thanks to positive global cues. Sentiments remained optimistic with an UN report, saying that Indian economy is likely to clock 8.1 percent growth in the current financial year, spurred by strong consumer spending amid low inflation, infrastructure projects and government's reform measures. Finance Minister Arun Jaitley too has said that the economy was in a recovery mode with inflation and fiscal deficit under control and despondency giving way to a positive environment. Market extended its gain in early afternoon session and recaptured its psychological 8, 250 level as European counterparts opened on a firm note. Further, in absence of any major cues, the market remained range-bound in second half of the session. Traders remained cautious as Reserve Bank of India (RBI) Governor Raghuram Rajan has once again raised concerns over rising Non Performing Assets (NPA) of some banks and has said that there was no danger of any financial crisis but it may be early to declare that the worst was over on the non-performing asset front. Traders were seen piling position in Consumer Durable, TECK and Healthcare stocks while selling was witnessed in Realty, Metal and Power sector. Eventually, Nifty ended the session above its crucial 8,250 mark with a gain of thirty eight points.

The top gainers from the F&O segment were Jubilant Foodworks, CESC and Hexaware Technologies. On the other hand, the top losers were Housing Development and Infrastructure, JSW Steel and Jaiprakash Power Ventures. 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 lost its positive movement and ended in red, which indicates that traders have slowdown buying options contracts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 4.28% and reached 19.81. The 50-share CNX Nifty was up by 38.15 points or 0.46% to settle at 8,262.35. Nifty May 2015 futures closed at 8261.20 on Friday at a discount of 1.15 points over spot closing of 8,262.35, while Nifty June 2015 futures ended at 8,286.25 at a premium of 23.90 points over spot closing. Nifty May futures saw contraction of 0.07 million (mn) units, taking the total outstanding open interest (OI) to 14.01 million (mn) units. The near month derivatives contract will expire on May 28, 2015.

From the most active contracts, State Bank of India May 2015 futures traded at a discount of 2.50 points at 284.50 compared with spot closing of 287.00. The number of contracts traded were 23,943.

ICICI Bank May 2015 futures traded at a premium of 1.10 points at 313.45 compared with spot closing of 312.35. The number of contracts traded were 16,832.

HDFC Bank May 2015 futures traded at a discount of 0.10 points at 990.80 compared with spot closing of 990.90. The number of contracts traded were 16,225.

Axis Bank May 2015 futures traded at a premium of 0.95 points at 562.55 compared with spot closing of 561.60. The number of contracts traded were 22,872.

Tata Steel May 2015 futures traded at a premium of 0.70 points at 364.30 compared with spot closing of 363.60. The number of contracts traded were 22,366.

Among Nifty calls, 8400 SP from the May month expiry was the most active call with an addition of 0.06 million open interests. Among Nifty puts, 8100 SP from the May month expiry was the most active put with an addition of 0.36 million open interests. The maximum OI outstanding for Calls was at 8500 SP (5.26 mn) and that for Puts was at 8,000 SP (5.08 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8290.30--- Pivot Point 8251.25--- Support --- 8223.30.

The Nifty Put Call Ratio (PCR) finally stood at 0.98 for May month contract. The top five scrips with highest PCR on OI were Eicher Motors (2.07), Union Bank of India (1.49), Hero MotoCorp (1.49), Allahabad Bank (1.18) and Dr. Reddy's Laboratories (1.13). 

Among most active underlying, Housing Development and Infrastructure witnessed a contraction of 0.11 million of Open Interest in the May month futures contract, followed by Jubilant Foodworks witnessing an addition of 0.10 million of Open Interest in the May month contract; State Bank of India witnessed a contraction of 3.01 million of Open Interest in the May month contract, Axis Bank witnessed a contraction of 0.16 million of Open Interest in the May month contract and ICICI Bank witnessed a contraction of 0.04 million of Open Interest in the May month's future contract.