Nifty extends gain for sixth consecutive session; closes above 8350 level

The Indian benchmark index --Nifty-- continued its northward journey for sixth consecutive day on Monday and finished the session with a gain of over half a percent. Sentiments got a boost with the report from Indian Meteorological Department that Monsoon rains have covered nearly all of India except some parts of the western states of Gujarat and Rajasthan, while the remaining region is likely to be covered this week. The rainfall deficit has also reduced to 6 percent, sharply down from 18 percent in the first week of June. Besides, appreciation in Indian rupee against the dollar too aided sentiments. Indian rupee strengthened for the fourth consecutive session to hit a two-week high against the US dollar. However, gains remained capped with RBI Governor Raghuram Rajan who warning against expecting too much from central banks, stated that it is wrong on their part also to always claim a ‘bazooka’ left up their sleeves. Rajan further stated that the ability to get a coherent economic policy in this environment is much more limited that what we have been experiencing for so many years in the past.

On global front, Asian market ended higher on Monday, while European markets after making positive opening, slipped in negative territory in late trade. Back home, after making a firm start, Nifty showed some strength in early trades however, it failed to breach the narrow 34-point range for most part of the day, ending the session above its crucial 8,350 mark with a gain of over half a percent. The top gainers from the F&O segment were Allahabad Bank, Punjab National Bank and Jaiprakash Associates. On the other hand, the top losers were ITC, Bosch and Ashok Leyland. In the index options segment, maximum OI was being seen in the 8300-8700 calls and 7900-8400 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 1.01% and reached 15.57. The 50-share Nifty was up by 42.35 points or 0.51% to settle at 8,370.70. 

Nifty July 2016 futures closed at 8387.35 on Monday at a premium of 16.65 points over spot closing of 8,370.70, while Nifty August 2016 futures ended at 8420.00 at a premium of 49.30 points over spot closing. Nifty July futures saw addition of 0.32 million (mn) units, taking the total outstanding open interest (OI) to 19.07 million (mn) units. The near month derivatives contract will expire on July 28, 2016.                                

From the most active contracts, State Bank of India July 2016 futures traded at a premium of 0.5 points at 223.40 compared with spot closing of 222.90. The number of contracts traded were 17,649.   

ICICI Bank July 2016 futures traded at a flat at 248.80. The number of contracts traded were 12,028.                    

Bank of Baroda July 2016 futures traded at a premium of 0.90 points at 160.70 compared with spot closing of 159.80. The number of contracts traded were 8,572.             

Punjab National Bank July 2016 futures traded at a discount of 0.65 points at 112.30 compared with spot closing of 112.95. The number of contracts traded were 10,976.   

DLF July 2016 futures traded at a premium of 0.50 points at 159.25 compared with spot closing of 158.75. The number of contracts traded were 11,375.    

Among Nifty calls, 8500 SP from the July month expiry was the most active call with a contraction of 0.06 million open interests. Among Nifty puts, 8300 SP from the July month expiry was the most active put with an addition of 0.97 million open interests. The maximum OI outstanding for Calls was at 8500 SP (4.28 mn) and that for Puts was at 8000 SP (4.38 mn). The respective Support and Resistance levels of Nifty are: Resistance 8391.20--- Pivot Point 8377.95--- Support --- 8357.45.             

The Nifty Put Call Ratio (PCR) finally stood at 1.12 for July month contract. The top five scrips with highest PCR on OI were Torrent Pharmaceuticals (1.60), Mindtree (1.40), Grasim Industries (1.34), Hero MotoCorp (1.09) and Britannia Industries (1.08).   

Among most active underlying, State Bank of India witnessed an addition of 0.20 million of Open Interest in the June month futures contract, followed DLF witnessing an addition of 0.52 million of Open Interest in the June month contract; Punjab National Bank witnessed an addition of 0.47 million of Open Interest in the June month contract, Tata Motors witnessed a contraction of 0.73 million of Open Interest in the June month contract and Larsen & Toubro witnessed a contraction of 0.01 million units of Open Interest in the June month's future contract.