Bulls take control over the market; Nifty reclaims 4,750 mark

Bulls hold their control throughout the day’s trade on Tuesday and Nifty ended remarkable day of trade with 2.80 percent gain recapturing its crucial 4,750 level. Broad based buying amongst index heavyweights like Infosys and RIL led the firm rally amid encouraging global manufacturing activity reports. Chinese manufacturing unexpectedly rebounded in December on holiday shopping, as the world's number two economy showed some resilience despite strife in key export markets. The country’s purchasing managers index (PMI) reached 50.3 in December. Moreover, Indian PMI too rose to 54.2, the most in six months, in a sign that the world’s fastest-growing major economies are withstanding Europe’s debt crisis.

Buoyed by encouraging global manufacturing activity reports, the Indian key benchmark made a gap-up start recapturing its 4,700 mark. Moreover, investors reacted optimistically to positive economic news. According to the HSBC purchasing managers’ index (PMI), the manufacturing sector expanded to 54.2 in December, as against 51 in the previous month of 2011, a figure above 50 signals increase in production. Banking space too supported the sentiments after the Reserve Bank of India (RBI) on December 30, 2011, issued draft guidelines outlining proposed implementation of Basel III capital regulation in India. Afterwards, market extended its initial rally supported by broad-based buying amid a firming trend in Asian markets in line with overnight gains on the European markets. Market continued its jubilant run till end of the day’s trade. Meanwhile, interest rate sensitive realty stocks rose on recent comments by RBI Governor D Subbarao that it is likely to begin easing monetary policy to address concerns about economic growth. Positive opening in European counters too aided the sentiments. In the final hour of trade, market recaptured its crucial 4,750 mark with a gain of over two and half a percent and snapped the session near its intraday high.

On the global front, equity markets which were opened for trade in Asia ended with significant gains on Tuesday as investors welcomed marginal improvement in factory activity across the globe. Moreover, most of the European counterparts were trading in the positive terrain at this point of time. However, the US markets remained closed on Monday in observance of New Year’s Day. Back home, all the sectoral indices on the NSE settled in the positive territory with CNX Metal gaining the most, up 4.95% followed by CNX PSU Bank up by 4.85%, CNX Realty up by 4.86% and Bank Nifty up by 4.32% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, tumbled 4.97% and reached 26.16.

The India VIX witnessed contraction of 4.97% at 26.16 as compared to its previous close of at 27.53 on Monday.

The 50-share S&P CNX Nifty gained 128.55 points or 2.77% to settle at 4,765.30.

Nifty January 2012 futures closed at 4,777.50 at a premium of 12.20 points over spot closing of 4,765.30, while Nifty February 2012 futures were at 4,795.70 at a premium of 30.40 points over spot closing. The near month January 2012 derivatives contract expires on Thursday, January 25, 2012. Nifty January futures saw addition of 1.91 million (mn) units taking the total outstanding open interest (OI) to 21.95 mn units.

From the most active contract by contract value, SBI’s January 2012 futures were at a discount of 13.25 point at 1693.00 compared with spot closing of 1706.25. The number of contracts traded was 30,078.

Tata Motors January 2012 futures were at a premium of 0.30 point at 194.00 compared with spot closing of 193.70. The number of contracts traded was 12,560.

RIL January 2012 futures were at a premium of 5.15 points at 727.80 compared with spot closing of 722.65. The number of contracts traded was 24,753.

Infosys January 2012 futures were at a premium of 14.20 point at 2879.00 compared with spot closing of 2864.80. The number of contracts traded was 12,009.

Axis Bank January 2012 futures were at a discount of 4.90 point at 835.00 compared with spot closing of 839.90. The number of contracts traded was 17,819.

Among Nifty calls, 4800 SP from the January month expiry was the most active call with a contraction of 0.20 million.

Among Nifty puts, 4700 SP from the January month expiry was the most active put with an addition of 1.90 million.

The maximum Call OI outstanding for Calls was at 4800 SP (3.40 mn) and that for Puts was at 4700 SP (4.32 mn).

The respective Support and Resistance levels are: Resistance 4800.33 -- Pivot Point 4738.06 -- Support 4703.03.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.23 for January -month contract.

The top five scrips with highest PCR on OI were Lupin 4.00, Gitanjali 2.73, DCHL 2.00, hotel Leela 2.00 and CESC 2.00.

Among most active underlying, SBI witnessed an addition of 0.32 million of Open Interest in the January month futures contract followed by Reliance Industries which witnessed an addition of 0.45 million of Open Interest in the near month contract. Meanwhile Tata Steel witnessed an addition of 1.02 million in the January month futures. Also, ICICI Bank witnessed an addition of 0.13 million in Open Interest in the January month contract. Finally, Axis Bank witnessed an addition of 0.74 million of Open Interest in the near month futures contract.