Euphoric Nifty kicks-off new series in style; garners over 100 points

Nifty continued its bull run for third consecutive session and closed the terrific day of trade with a gain of over a percent reclaiming its crucial 8,500 level. Capital infusion in banks, clarity on retrospective tax on capital gains and expectations of a rate cut by the apex bank cheered investor sentiments. On the global front, the Asian markets closed mostly higher despite continued weakness in Chinese shares, lackluster data from Japan and a mixed bag of U.S. corporate earnings results. Further, the European markets made a mostly a positive start, heading for their biggest monthly jump since February.

Back home, the frontline index gathered strength from strong global cues and commenced the northbound journey with great conviction ahead of the Reserve Bank of India’s policy meet on August 4, 2015. The sentiments remained up-beat with the report that the government notifying  composite cap in the FDI policy, allowing up to 49 per cent foreign portfolio investment (FPI) through the automatic route in most sectors, including brownfield pharmaceuticals, single-brand retail, insurance, pension and facsimile editions of foreign newspapers.  Investors remained optimistic after the cabinet approved a bill on the goods and services tax that incorporates recommendations from a parliamentary panel, and after the Federal Reserve meeting ended with no major surprises. The index further capitalized on the momentum and spurted in afternoon trades on the report that the Finance Minister Arun Jaitley sought Parliament's approval on Friday to increase the spending budget for this fiscal year by $4 billion. Hyperactive bulls aggressively piled up positions not only in heavyweight stocks but in the broader markets too. Public sector banks witnessed a jubilant run today on the report that the government proposed to infuse capital to the tune of Rs. 70,000 crore in state-run lenders over four years. Investors also piled up positions in the rate sensitives like auto and realty stocks on hopes that Reserve Bank of India’s (RBI) governor Raghuram Rajan will spring a pleasant surprise in the form of a rate cut due to the decline in crude prices, advancement of monsoon and neutral stance by the Federal Reserve. The July Nifty rollover was seen at better than expected, quarterly numbers also supported the domestic markets along with the  government's clarification on the recommendations made by the Justice A.P.Shah committee on minimum alternate tax (MAT) and the P-Notes also calmed investors anxiety.

The top gainers from the F&O segment were Sun TV Network, India Cements and Union Bank of India. On the other hand, the top losers were Colgate Palmolive, Titan Company and Steel Authority of India. In the index options segment, maximum OI was being seen in the 8700-9000 calls and 8400-8200 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 4.92% and reached 14.57. The 50-share CNX Nifty was up by 111.05 points or 1.32% to settle at 8,532.85. Nifty August 2015 futures closed at 8569.65 on Friday at a premium of 36.80 points over spot closing of 8,532.85, while Nifty September 2015 futures ended at 8607.10 at a premium of 74.25 points over spot closing. Nifty August futures saw addition of 0.65 million (mn) units, taking the total outstanding open interest (OI) to 17.25 million (mn) units. The near month derivatives contract will expire on August 27, 2015.

From the most active contracts, ICICI BankAugust 2015 futures traded at premium of 3.75 points at 304.55 compared with spot closing of 300.80. The number of contracts traded were 69,123.

SBI August 2015 futures traded at a premium of 2.10 points at 271.40 compared with spot closing of 269.30. The number of contracts traded were 41,738.

Tata Motors August 2015 futures traded at a premium of 1.20 points at 385.20 compared with spot closing of 384.00. The number of contracts traded were 22,659.

Reliance August 2015 futures traded at a premium of 6.00 points at 1007.00compared with spot closing of 1,001.00. The number of contracts traded were 27,739.

Axis Bank August 2015 futures traded at a premium of 2.35 points at 577.25 compared with spot closing of 574.90. The number of contracts traded were 20,993.

Among Nifty calls, 8700 SP from the August month expiry was the most active call with an addition of 0.17 million open interests.  Among Nifty puts, 8400 SP from the August month expiry was the most active put with an addition of 0.92 million open interests. The maximum OI outstanding for Calls was at 8800 SP (3.33 mn) and that for Puts was at 8200 SP (3.86 mn).  The respective Support and Resistance levels of Nifty are: Resistance 8571.87 --- Pivot Point 8509.93 --- Support --- 8470.92.

The Nifty Put Call Ratio (PCR) finally stood at 1.04 for August month contract.  The top five scrips with highest PCR on OI were Pidilite Industries (3.75), KSCL (3.43), JSW Steel (2.13), BOSCH (2) and Aditya Birla Nuvo (1.47). 

Among most active underlying, ICICI Bank witnessed an addition of 5.64 million of Open Interest in the August month futures contract, followed by State Bank of India witnessing a contraction of 0.42 million of Open Interest in the August month contract; Larsen & Toubro witnessed an addition of 0.03 million of Open Interest in the August month contract, Reliance Industries witnessed a contraction of 0.59 million of Open Interest in the August month contract and Kotak Mahindra Bank witnessed an addition of 0.64 million units of Open Interest in the August month's future contract.