Nifty extends gain for second consecutive session; closes above 8500 level

The local benchmark Nifty continued its northward journey for second consecutive day on Tuesday and finished the outstanding day of trade with a gain of 53 points or 0.63%, on the back of encouraging US data and expectations of further monetary stimulus from global policymakers. Sentiments got a boost with global ratings agency Crisil report that India’s economy will grow at 7.9 percent in the current financial year compared with 7.6 percent in fiscal 2016, if the country receives normal monsoon, it will boost agriculture growth and lift rural demand. The rating agency also expects the Reserve Bank of India to continue its accommodative monetary stance and cut the repo rate by another 25 bps this fiscal. Besides, the strong likelihood of a Goods and Services Tax Bill being passed in the monsoon session of Parliament, which starts on July 18, and hopes of a good start to the quarterly earnings season also boosted investor sentiment. Some support also came with the India Meteorological Department (IMD) reported that monsoon rains will cover the whole of India in the next 48 hours boosting hopes of a rise in farm output and incomes after two straight years of drought.

On the global front, Asian markets ended higher on Tuesday on the speculation that the US Federal Reserve may not hike the rates for at least a year as Fed may focus on how the UK decision to leave the European Union impacts the global economy. Further, European markets extended their gains for fourth consecutive day, as consumer prices advanced in Germany, business confidence rose in Spain and home-builders logged gains in the UK as house prices rose in the second quarter. Back home, After getting a gap-up start, Nifty traded in sluggish note through the morning trades, but saw a sudden spurt of buying post the sanguine European market opening. The frontline index contended on a northbound journey thereafter as investors started building up more positions which helped the benchmark to snap Tuesday’s session around high point of the day.  Finally, Nifty ended the session above its crucial 8,500 mark with a gain of over half a percent. The top gainers from the F&O segment were Unitech, Cairn India and Vedanta. On the other hand, the top losers were KPIT Technologies, Godrej Consumer Products and Sun TV Network. In the index options segment, maximum OI was being seen in the 8400-8800 calls and 7900-8700 puts.

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility decreased by 0.44% and reached 14.78. The 50-share Nifty was up by 53.15 points or 0.63% to settle at 8,521.05.

Nifty July 2016 futures closed at 8528.75 on Tuesday   at a premium of 7.70 points over spot closing of 8,521.05, while Nifty August 2016 futures ended at 8564.55 at a premium of 43.50 points over spot closing. Nifty July futures saw addition of 1.31 million (mn) units, taking the total outstanding open interest (OI) to 21.25 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 0.10 points at 226.85 compared with spot closing of 226.75. The number of contracts traded were 16,272.   

ICICI Bank  of July 2016 futures traded at a premium of 0.15 points at 261.85 compared with spot closing of 261.70. The number of contracts traded were 20,171.    

Bank of Baroda  July 2016 futures traded at a premium of 1.10 points at 161.60 compared with spot closing of 160.50. The number of contracts traded were 9,607.             

Punjab National Bank July 2016 futures traded at a discount of 0.90 points at 125.75 compared with spot closing of 126.65. The number of contracts traded were 10,760.   

Vedanta July 2016 futures traded at a discount of 1.85 points at 160.05 compared with spot closing of 161.90. The number of contracts traded were 15,206. 

Among Nifty calls, 8500 SP from the July month expiry was the most active call with a contraction of 0.18 million open interests. Among Nifty puts, 8400 SP from the July month expiry was the most active put with an addition of 1 million open interests. The maximum OI outstanding for Calls was at 8600 SP (4.78 mn) and that for Puts was at 8400 SP (4.97 mn). The respective Support and Resistance levels of Nifty are: Resistance 8538.70 --- Pivot Point 8508.95 --- Support --- 8491.30. 

The Nifty Put Call Ratio (PCR) finally stood at 1.24 for July month contract. The top five scrips with highest PCR on OI were Vedanta (1.37), Maruti Suzuki India (1.29), Mindtree (1.24), HDFC (1.20) and Grasim (1.09). 

Among most active underlying Vedanta witnessed an addition of 0.41 million of Open Interest in the July month futures contract, followed Tata Steel witnessing an addition of 0.29 million of Open Interest in the July month contract; ICICI Bank witnessed an addition of 1.33 million of Open Interest in the July month contract, State Bank of India witnessed a contraction of 0.02 million of Open Interest in the July month contract and Punjab National Bank witnessed an addition of 0.63 million units of Open Interest in the July month's future contract.