Nifty ends higher for fifth straight day

The Indian equity index -- Nifty -- ended higher on Monday due to sustained buying by funds and retail investors mainly in Hindalco, Tata Motors, Tata Power and Coal India amid firm cues from global Markets. Investors’ sentiment remained positive with private report that a normal monsoon this year is expected to provide 20% boost to the income of farmers, whose debt leverage has touched 22% following two years of droughts. On an average, farmers’ income has come down by 3 per cent in 2014-15 and by 4 per cent in 2015-16. Investors’ sentiments also got some encouragement with the former Singapore Prime Minister Goh Chok Tong’s statement that the India is a beacon of hope and has the potential to drive the world economy for the next 10 years, amid concerns of a slowing global growth. Further, some support also came in with the report that India is one of the best-placed among emerging market economies as domestic factors have started to turn 'incrementally positive' indicating a nascent recovery.  According to the report, several economic data such as electricity generation, cement production, diesel consumption and tractor growth are showing a sharp improvement over 2015. Besides, better than expected Q4 numbers by some companies too beyond investors sentiment. However, upside remained capped as Investors remained cautious after India Ratings and Research stated that the economic growth of the country is expected to be 7.5% in 2015-16, lower than advance estimate of 7.6% by the Central Statistics Office.

On the global front, Asian markets ended higher, led by Japan, as the yen weakened against the dollar. A weaker local currency benefits exporters, as they can sell their goods at more competitive prices overseas. European shares hit one-month highs on Monday, while the dollar index rose to a two-month peak after Federal Reserve Chair Janet Yellen suggested that an interest rate hike in the United States may be around the corner.

Back home, after making a positive start, Indian equity benchmark Nifty showed some strength in early morning trades, however, it failed to breach the narrow 50-point range for most part of the day, ending the session above its crucial 8,150 mark with a gain of around quarter a percent. The top gainers from the F&O segment were Crompton Greaves, Hindalco Industries and L&T Finance Holdings. On the other hand, the top losers were Jubilant Foodworks, Bharat Heavy Electricals and NMDC. In the index options segment, maximum OI was being seen in the 8000-8500 calls and 7000-8100 puts. In today's session, while the traders preferred to exit 7700 put, heavy buildup was seen in the 8000 put. On the other hand, traders exited from 8100 Call, while 8400 call witnessed considerable OI addition.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 4.69% and reached 15.97. The 50-share Nifty was up by 21.85 points or 0.27% to settle at 8,178.50.   

Nifty June 2016 futures closed at 8194.30 on Monday at a premium of 15.80 points over spot closing of 8,178.50, while Nifty July 2016 futures ended at 8214.65 at a premium of 36.15 points over spot closing. Nifty June futures saw addition of 0.75 million (mn) units, taking the total outstanding open interest (OI) to 21.69 million (mn) units. The near month derivatives contract will expire on June 30, 2016.                              

From the most active contracts, SBI June 2016 futures traded at a discount of 0.40 points at 197.40 compared with spot closing of 197.80. The number of contracts traded were 38,985.                

ICICI Bank June 2016 futures traded at a discount of 3.70 points at 240.55 compared with spot closing of 244.25. The number of contracts traded were 13,653.          

Hindalco Industries June 2016 futures traded at a premium of 0.90 points at 103.70 compared with spot closing of 102.80. The number of contracts traded were 15,717.  

Tata Motors June 2016 futures traded at a discount of 0.65 points at 422.35 compared with spot closing of 423.00. The number of contracts traded were 20,305.                

Tata Steel June 2016 futures traded at a premium of 2.75 points at 324.65 compared with spot closing of 321.90. The number of contracts traded were 11,004.        

Among Nifty calls, 8300 SP from the May month expiry was the most active call with an addition of 0.08 million open interests. Among Nifty puts, 8000 SP from the May month expiry was the most active put with an addition of 1.49 million open interests. The maximum OI outstanding for Calls was at 8400 SP (3.60 mn) and that for Puts was at 8000 SP (5.37 mn). The respective Support and Resistance levels of Nifty are: Resistance 8202.07 --- Pivot Point 8176.43 --- Support --- 8152.87.             

The Nifty Put Call Ratio (PCR) finally stood at 1.16 for May month contract. The top five scrips with highest PCR on OI were Indian Overseas Bank (1.94), Andhra bank (1.39), Indusind Bank (1.39), UCO Bank (1.37) and Ajanta Pharma.  

Among most active underlying, State Bank of India witnessed a contraction of 0.57 million of Open Interest in the May month futures contract, followed Tata Motors witnessing an addition of 2.85 million of Open Interest in the May month contract; Hindalco Industries witnessed a contraction of 0.55 million of Open Interest in the May month contract, Tata Steel witnessed an addition of 0.46 million of Open Interest in the May month contract and Sun Pharmaceuticals Industries witnessed an addition of 1.00 million units of Open Interest in the May month's future contract.