Late hour recovery pulls Nifty over 4,700 mark

Exceptional recovery in late trade following firm cues from European indices helped Nifty to continue their jubilant run for second consecutive day. However, market traded in the red for most part of the day but, it pared all its first half losses in the last leg of trade and snapped the day’s trade with a gain of about a percentage point recapturing its crucial 4,700 mark.

Earlier, the Indian equity market made somber start as investors booked their profits recorded in the previous sessions amid a weak trend in other Asian markets. Meanwhile, IT stocks like Infosys, TCS, Wipro and HCL Tech edged lower in the early trade after dismal results from Oracle Corp, the world's No.3 software maker, stoke renewed fears of a slowdown in global technology spending. Capital goods pivotals declined on worries that new order flows will be hit adversely in a slowing economy. The index breached its psychological 4,650 level as investors overlooked the encouraging weekly inflation numbers. The food inflation eased sharply to 1.8% in the year to December 10, from an annual 4.35% rise in the previous week, government data showed on Thursday. Food inflation fell sharply to a near four-year low as prices of essential items like vegetables, onion, potato and wheat declined. This is the lowest rate of food inflation since the week ended February 9, 2008, when it stood at 2.26%. Market continued its downfall till mid noon trade and touched its intraday low. But, it was the final hour of trade where market took U-turn and gained about 100 points from its intraday low following firm cues from European counterparts. Meanwhile, considering that sugar industry would be the priority area after Food Bill, Food Minister KV Thomas reportedly said on Wednesday, December 21, 2011, the government will consider the demand for partial decontrol of the sector. Stocks of Shree Renuka Sugars, Balrampur Chini Mills, Dwarikesh Sugar Industries and Dhampur Sugar Mills, all traded in jubilant mood. Finally, Nifty snapped the day’s trade near its intraday high with a gain of about a percentage point.

On the global front, the US markets managed to make a flat closing with a positive bias overnight while, Asian markets ended mostly lower on Thursday as investors remained cautious due to the ongoing Eurozone debt woes - despite improved sentiments earlier in the day that was boosted by signs of a recovery in the US housing market. However, all the European counterparts were trading in the positive terrain where major indices CAC, DAX and FTSE all were trading with a gain of over a percentage point at this point of time. Back home, on the sectoral indices on the NSE, CNX Realty remained the major gainer, up 2.16% followed by Bank Nifty up 1.26% and CNX PSU Bank up by 0.77% while CNX IT declined by 0.89% remained the lone loser in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 2.50% and reached 26.84.

The India VIX witnessed contraction of 2.50% at 26.84 as compared to its previous close of at 27.53 on Wednesday.

The 50-share S&P CNX Nifty gained 40.70 points or 0.87% to settle at 4,733.85.

Nifty December 2011 futures closed at 4,753.00 at a premium of 19.15 points over spot closing of 4,733.85, while Nifty January 2011 futures were at 4,770.00 at a premium of 36.15 points over spot closing. The near month December 2011 derivatives contract expires on Thursday, December 29, 2011. Nifty December futures saw addition of 0.76 million (mn) units taking the total outstanding open interest (OI) to 18.00 mn units.

From the most active contract by contract value, SBI’s December 2011 futures were at a premium of 3.15 point at 1673.15 compared with spot closing of 1670.00. The number of contracts traded was 56,302.

ICICI Bank December 2011 futures were at a premium of 1.20 point at 720.60 compared with spot closing of 719.40. The number of contracts traded was 44,745.

Axis Bank December 2011 futures were flat at 877.00 compared with spot closing of 877.00. The number of contracts traded was 27,441.

L&T December 2011 futures were at a premium of 5.55 points at 1020.55 compared with spot closing of 1015.00. The number of contracts traded was 23,257.

Infosys December 2011 futures were at a discount of 1.90 point at 2708.30 compared with spot closing of 2710.20. The number of contracts traded was 16,739.

Among Nifty calls, 4700 SP from the December month expiry was the most active call with a contraction of 0.06million or 1.38%.

Among Nifty puts, 4600 SP from the December month expiry was the most active put with a contraction of 0.55 million or 9.21 %.

The maximum Call OI outstanding for Calls was at 4700 SP (4.59 mn) and that for Puts was at 4600 SP (6.58 mn).

The respective Support and Resistance levels are: Resistance 4771.98-- Pivot Point 4702.46-- Support 4664.33.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.90 for December -month contract.

The top five scrips with highest PCR on OI were Patni 11.75, Indian Hotels Company 8.00, Canara Bank 7.14, ABB 4.75 and CESC 4.20.

Among most active underlying, SBI witnessed an addition of 3.55% of Open Interest in the December month futures contract followed by ICICI Bank which witnessed an addition of 5.20% of Open Interest in the near month contract. Meanwhile Tata Steel witnessed a contraction of 1.05% in the December month futures. Also, Axis Bank witnessed an addition of 9.44% of Open Interest in the December month contract. Finally, Reliance Industries witnessed a contraction of 0.02% of Open Interest in the near month futures contract.