Nifty showcases smart recovery; ends above 8500 mark

The fifty stock index -- Nifty -- showcased a smart recovery as demand for defensive pharma shares helped offset most of the intra-day losses. However, the possibility of Greek exiting the euro zone after they rejected the tough austerity measures proposed by creditors, weighed on investor sentiments.  On the global front, Asian markets closed mostly in red, after voters in Greece rejected austerity plans demanded by international creditors, casting doubt on the country's future in the euro zone. Further, European counters were trading in red in early deals with CAC, DAX and FTSE were trading with a cut of around a percentage point.

Back home, Indian equity benchmark made a gap down start on Monday with tumbling below its crucial 8,450 mark, as funds and investors indulged in reducing exposures amid weak cues from other Asian markets. Sentiments remained subdued on the report that Goods and Services Tax (GST) Bill is unlikely to be taken up in the coming monsoon session of Parliament, as the Congress members on the joint parliamentary panel on GST are likely to submit dissent notes against the panel’s report to be submitted on July 17. After the subdued opening, the key gauges plunged to lowest point in the day on sharp across the board sell-off. Thereafter started the road to recovery for the index, which kept slowly but steadily moving towards the neutral line. The index further capitalized on the momentum and turned positive in late afternoon trades as investors resorted to short covering on news fresh negotations between European Union finance ministers and Greece will be held on Tuesday raising hopes of some kind of resolution to the current standoff between the two sides. Some support also came with Finance Minister Arun Jaitley’s statement that policy reforms and 8-10 per cent economic growth are a must to eliminate poverty. Besides, some safe-haven buying in Indian equities as India remains less exposed to Greece crisis as compared to some other Asian countries. Traders were seen piling position in Oil & Gas, Realty and FMCG stocks while selling was witnessed in Consumer Durables, Metal and Teck sector stocks. Eventually, Nifty ended the session above its crucial 8,500 mark with gains of thirty seven points.

The top gainers from the F&O segment were Arvind, Bata India and SRF. On the other hand, the top losers were Vedanta, NMDC and Tata Motors. In the index options segment, maximum OI was being seen in the 8400-8600 calls and 8000-7800 puts. In today's session, while the traders preferred to exit 8100 put, heavy buildup was seen in the 8300 put. On the other hand, traders exited from 8700 Call, while 8600 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.76% and reached 16.01. The 50-share CNX Nifty was up by 37.25 points or 0.44% to settle at 8,522.15. Nifty July 2015 futures closed at 8537.75 on Monday at a premium of 15.60 points over spot closing of 8,522.15, while Nifty August 2015 futures ended at 8575.05 at a premium of 52.90 points over spot closing. Nifty July futures saw addition of 0.38 million (mn) units, taking the total outstanding open interest (OI) to 17.74 million (mn) units. The near month derivatives contract will expire on July 30, 2015.

From the most active contracts, State Bank of India July 2015 futures traded at premium of 0.00 points at 271.45 compared with spot closing of 271.45. The number of contracts traded were 26,611.

ICICI Bank July 2015 futures traded at a premium of 0.50 points at 316.55 compared with spot closing of 316.05. The number of contracts traded were 21,042.

Reliance Industries July 2015 futures traded at a premium of 3.80 points at 1021.50 compared with spot closing of 1017.70. The number of contracts traded were 26,732.

Tata Motors July 2015 futures traded at a premium of 2.35 points at 432.15 compared with spot closing of 429.80. The number of contracts traded were 17,775.

HDFC Bank July 2015 futures traded at a discount of 4.10 points at 1087.55 compared with spot closing of 1083.45. The number of contracts traded were 20,520.

Among Nifty calls, 8600 SP from the July month expiry was the most active call with an addition of 0.40 million open interests.  Among Nifty puts, 8300 SP from the July month expiry was the most active put with an addition of 0.11 million open interests.  The maximum OI outstanding for Calls was at 8500 SP (4.52 mn) and that for Puts was at 8000 SP (5.56 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8574.82 --- Pivot Point 8480.48 --- Support --- 8427.82.

The Nifty Put Call Ratio (PCR) finally stood at 1.46 for July month contract.  The top five scrips with highest PCR on OI were Dr. Reddys Laboratories (1.23), Just Dial (1.18), Bosch (1.13), JSW Steel (1.08) and Divis Laboratories (1.05).

Among most active underlying, Reliance Industries witnessed an addition of 0.24 million of Open Interest in the July month futures contract, followed by State Bank of India witnessing an addition of 0.03 million of Open Interest in the July month contract; ICICI Bank witnessed an addition of 0.43 million of Open Interest in the Julymonth contract, Axis Bank witnessed an addition of 0.26 million of Open Interest in the July month contract and Kotak Mahindra Bank witnessed an addition of 0.51 units of Open Interest in the July month's future contract.