Nifty gains after previous session’s consolidation; reclaims 8500 Mark

Breaking the consolidation mood, the Indian equity index nifty moved higher on Wednesday, with investors lapping up automobile and IT shares amid positive global cues and optimism over Iran reaching an agreement on its nuclear deal with world power. Sentiment remained upbeat that the nuclear deal will boost global oil production in a lacklustre market and in turn bring down prices further, a development expected to keep India's current account deficit under control and further lessen subsidy burden of domestic upstream oil companies. On the global front,  European markets remained flat ahead of Greek parliamentary vote on a raft of reform measures that could secure the country another bailout. The deal requires parliament to ratify four measures related to tax, pension and budget reforms in order to trigger a vote from six other national parliaments throughout the euro zone. Further, Asian markets closed mixed with the Shanghai falling 3 per cent and Nikkei gaining 0.4 per cent.

Back home, after getting a positive start, CNX Nifty showed some strength in morning trade, as sentiments were on optimistic note with rating agency Moody’s statement that the Reserve Bank of India may possibly cut interest rates in its next monetary policy review due next month despite retail inflation surging to an eight-month high in June. Market, for rest of the session, traded in the tight range as investors remained sideways in the absence of any significant trigger at domestic front. Sentiments got some support with global rating agency Standard and Poor’s (S&P) latest report, expecting a stable trend in sovereign credit rating in Asia-Pacific nations, including India, despite growing economic uncertainties. In its mid-year review of the Asia-Pacific region, S&P retained India’s sovereign rating at ‘BBB-' with stable outlook as originally mentioned in its report in September 2014. However, gains remained capped with the report that Monsoon slowed down to 33 percent below normal in July. It is expects to pick up only post July 23. Weak monsoon has hurt sowing in part of Gujarat, Maharasthra and northern part of Karnataka. Traders were seen piling position in Auto, IT and TECK stocks while selling was witnessed in Consumer Durables and PSU sector stocks.

The top gainers from the F&O segment were Amtek Auto, Godrej Industries and IRB Infrastructure Developers. On the other hand, the top losers were Sun TV Network, Jaiprakash Associates and IFCI. In the index options segment, maximum OI was being seen in the 8400-8600 calls and 8200-8400 puts. In today's session, while the traders preferred to exit 8300 put, heavy buildup was seen in the 8400 put. On the other hand, traders exited from 8500 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 2.76% and reached 15.56. The 50-share CNX Nifty was up by 69.70 points or 0.82% to settle at 8,523.80. Nifty July 2015 futures closed at 8542.05 on Wednesday at a premium of 18.25 points over spot closing of 8,523.80, while Nifty August 2015 futures ended at 8579.50 at a premium of 55.70 points over spot closing. Nifty July futures saw addition of 0.62 million (mn) units, taking the total outstanding open interest (OI) to 20.48 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 0.55 points at 269.15 compared with spot closing of 268.60. The number of contracts traded were 17,872.

Tata Motors July 2015 futures traded at a premium of 1.70 points at 395.80 compared with spot closing of 394.10. The number of contracts traded were 31,858.

Reliance July 2015 futures traded at a premium of 7.00 points at 1015.85 compared with spot closing of 1008.85. The number of contracts traded were 28,008.

HDFC Bank July 2015 futures traded at a premium of 5.30 points at 1101.30 compared with spot closing of 1,096.00. The number of contracts traded were 13,767.

Axis Bank July 2015 futures traded at a premium of 1.75 points at 586.30 compared with spot closing of 584.55. The number of contracts traded were 14,227.

Among Nifty calls, 8500 SP from the July month expiry was the most active call with an addition of 0.10 million open interests.  Among Nifty puts, 8400 SP from the July month expiry was the most active put with an addition of 1.77 million open interests.  The maximum OI outstanding for Calls was at 8600 SP (4.22 mn) and that for Puts was at 8400 SP (6.06 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8549.15 --- Pivot Point 8506.05 --- Support --- 8480.70.

The Nifty Put Call Ratio (PCR) finally stood at 1.44 for July month contract.  The top five scrips with highest PCR on OI were Dr. Reddys Laboratories (1.44), L&T (1.21), Grasim (1.11), Eicher Motors (1.07) and BHEL (1.04).

Among most active underlying, Maruti Suzuki India witnessed an addition of 0.17 million of Open Interest in the July month futures contract, followed by Reliance Industries witnessing an addition of 0.05 million of Open Interest in the July month contract; Zee Entertainment Enterprises witnessed an addition of 1.08 million of Open Interest in the July month contract, Tata Motors witnessed an addition of 0.17 million of Open Interest in the July month contract and Tata Consultancy Services witnessed a contraction of 0.23 million units of Open Interest in the July month's future contract.