Nifty reclaims its crucial 8400 level

After witnessing drubbing in previous session, domestic index Nifty heaved a sigh of relief garnering a good gain on Wednesday’s trade, as blue-chips advanced on resumption of buying by foreign investors, while forecast of a timely monsoon continued to raise hopes that the central bank would lower interest rates in June. On the global front, Asian markets closed mostly in green as a rebound in US home construction data and a surprise announcement by the European Central Bank to frontload bond buying sent the greenback higher, giving a boost to Asian exporters. Further, European shares edged up slightly after rebounding strongly in the previous session, with the telecoms sector getting a big lift from deal-making and takeover talk.

The index got off to a boisterous opening on across-the-board buying by funds and retail investors amid positive cues from other Asian markets.  Sentiment got a boost with an UN report, saying that Indian economic growth is projected to surpass that of China, with the GDP expected to zoom by 7.7% in 2016, while China is projected to grow by 7 per cent in 2015 and 6.8 per cent next year. Some support also came with the HSBC report that the current account deficit is likely to remain at ‘manageable levels’ of around 1.5 per cent of GDP in the current fiscal despite a marginal rise in oil prices and sluggish manufacturing exports. However, some investors remained cautious as the RBI Governor Raghuram Rajan has said that lower interest rates and tax incentives can boost investments, but it is consumer demand that holds the key for pushing economic growth. Thereafter, the indices kept oscillating in a narrow range for most part of the day, ending the session above its crucial 8,400 mark with a gain of fifty seven points. Traders were seen piling position in IT, TECK and Bankex stocks while selling was witnessed in Auto, Metal and Capital Goods sectors stocks.

The top gainers from the F&O segment were Century Textiles & Industries, United Breweries and Tech Mahindra. On the other hand, the top losers were Bharat Forge, Reliance Communications and Jaiprakash Power Ventures. In the index options segment, maximum OI is being seen in the 8400-8600 calls and 8000-8200 puts. In today's session, while the traders preferred to exit 8000 put, heavy buildup was seen in the 8400 put. On the other hand, traders exited from 8300 Call, while 8800 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 3.02% and reached 17.71. The 50-share CNX Nifty was up by 57.60 points or 0.69% to settle at 8,423.25.

Nifty May 2015 futures closed at 8424.30 on Wednesday at a premium of 1.05 points over spot closing of 8,423.25, while Nifty June 2015 futures ended at 8,449.45 at a premium of 26.20 points over spot closing. Nifty May futures saw contraction of 0.01 million (mn) units, taking the total outstanding open interest (OI) to 13.58 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 3.05 points at 289.25 compared with spot closing of 292.30. The number of contracts traded were 22,628.

ICICI Bank May 2015 futures traded at a premium of 1.35 points at 319.40 compared with spot closing of 318.05. The number of contracts traded were 16,928.

HDFC Bank May 2015 futures traded at a premium of 1.75 points at 1022.75 compared with spot closing of 1021.00. The number of contracts traded were 20,023.

Reliance Industries May 2015 futures traded at a premium of 2.70 points at 909.60 compared with spot closing of 906.90. The number of contracts traded were 24,974.

Axis Bank May 2015 futures traded at a premium of 1.80 points at 560.10 compared with spot closing of 558.30. The number of contracts traded were 19,062.

Among Nifty calls, 8400 SP from the May month expiry was the most active call with a contraction of 0.41 million open interests. Among Nifty puts, 8400 SP from the May month expiry was the most active put with an addition of 1.14 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.94 mn) and that for Puts was at 8,100 SP (5.61 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8445.25--- Pivot Point 8418.35--- Support --- 8396.35.

The Nifty Put Call Ratio (PCR) finally stood at 1.17 for May month contract. The top five scrips with highest PCR on OI were UltraTech Cement (1.69), Dr. Reddy's Laboratories (1.66), Hero MotoCorp (1.64), Eicher Motors (1.54) and Union Bank of India (1.52). 

Among most active underlying, Bharat Forge witnessed an addition of 0.37 million of Open Interest in the May month futures contract, followed by State Bank of India witnessing a contraction of 0.47 million of Open Interest in the May month contract; Reliance Industries witnessed a contraction of 1.07 million of Open Interest in the May month contract, Tata Steel witnessed an addition of 0.54 million of Open Interest in the May month contract and ICICI Bank witnessed a contraction of 0.66 million of Open Interest in the May month's future contract.