Bullish euphoria takes Nifty past 7550 level

After opening gap up and consolidating for initial part of the day, the National Stock Exchange’s broader 50-share CNX Nifty made a remarkable move in the latter half to end session with hefty gains of around one and half percent and scale fresh all-time highs.  With timely southwest monsoon set to lash the Kerala coast and hefty overseas inflows continuing, hopes of policy reforms by the new government buoyed investing sentiments. Moreover, firm global cues coupled with the appreciation in rupee value against the dollar added to the euphoria. Healthy buying was observed in stocks like Realty, Oil & Gas and PSU sectors, while selling pressure was seen in IT and TECK counters. Oil and gas stocks such as ONGC, Gail and RIL surged reacting to reports that the oil ministry may consult the Prime Minister’s Office for raising prices of liquefied petroleum gas and kerosene. Shares of sugar companies edged higher after reports that government is planning to increase export subsidy.

The index traded range bound up till the first half of session, but in the final hour of trade Nifty spiked up and touched its day’s high taking support from firm European counterparts, which were positive as the European Central Bank announced measures to stimulate  economy. Nifty rose higher for the second consecutive session gaining around 2.5% percent in two days taking itself very close to breaching the psychologically important 7600 level.

In near term, the market will continue to make fresh record highs supported by global liquidity and hopes of economic revival in Asia's third largest economy. The much-awaited Budget expected to be unveiled by mid-July will be the first major policy document of the Narendra Modi government. Looking at the index option data for June series maximum call OI is seen at 7500 followed by 7600 strike prices whereas maximum put OI is at 7000 & 7200 strike prices suggesting broader range is likely in between 7000-7500 levels.

The top gainers from F&O Securities were Tata Global Beverages, Oil & Natural Gas Corporation and Gail. The top losers were Jain Irrigation Systems, Sesa Sterlite and PTC India. Snapping three consecutive sessions’ losing streak, India VIX - the gauge of underlying volatility in the market - has risen in today's session as traders turned cautious after the benchmark breaches psychological level of 7500. 

The India Volatility Index (VIX), a gauge for market's short term expectation of volatility increased by 3.46% and reached 15.98. The 50-share CNX Nifty increased by 109.30 points or 1.46% to settle at 7,583.40. Nifty June 2014 futures closed at 7590.75 on Friday at a premium of 7.35 points over spot closing of 7,583.40, while Nifty July 2014 futures ended at 7623.90 at a premium of 40.50 points over spot closing. Nifty June futures saw contraction of 0.10 million (mn) units, taking the total outstanding open interest (OI) to 13.93 mn units. The near month June 2014 derivatives contract will expire on June 26, 2014.

From the most active contracts, Reliance Communications June 2014 futures were at a premium of 0.60 points at 151.70 compared with spot closing of 151.10. The number of contracts traded was 21,295.

IDEA Cellular June 2014 futures were at a premium of 0.80 points at 141.65 compared with spot closing of 140.85. The number of contracts traded was 20,417.

DLF June 2014 futures were at a premium of 0.60 points at 234.35 compared with spot closing of 233.75. The number of contracts traded was 28,440.

Tata Global Beverages June 2014 futures traded at a premium of 1.50 points at 172.25 compared with spot closing of 170.75. The number of contracts traded was 29,606.

Reliance Industries June 2014 futures traded flat at 1,126 compared with spot closing of 1,126. The number of contracts traded was 53,222. Among Nifty calls, 7,600 SP from the June month expiry was the most active call with an addition of 0.32 million open interest. Among Nifty puts, 7,400 SP from the  June month expiry was the most active put with an addition of 0.95 million open interest. The maximum OI outstanding for Calls was at 7,500 SP (5.04 mn) and that for Puts was at 7,000 SP (4.58 mn).  The respective Support and Resistance levels of Nifty are: Resistance 7618.18 --- Pivot Point 7557.92 --- Support --- 7523.13.

The Nifty Put Call Ratio (PCR) finally stood at 1.04 for June month contract. The top five scrips with highest PCR on OI were Mcleod Russel India with 1.62, Hero MotoCorp with 1.58, UltraTech Cement with 1.27, Tata Steel with 1.19, ACC with 1.07.

Among most active underlying, Reliance Industries witnessed contraction of 0.16 million of Open Interest in the June month futures contract, followed by Oil & Natural Gas Corporation witnessing an addition of 0.97 million of Open Interest in the June  month contract; while DLF witnessed an addition of 0.46 million of Open Interest in the June month futures contract, ICICI Bank witnessed contraction 0.32 million of Open Interest in the June month contract and Tata Steel witnessed contraction of 0.31 million  of Open Interest in the June month's future contract.