Nifty extends consolidation amid final hour profit booking

The fifty stock index -- Nifty -- continue to witness consolidation snapping the day’s trade on a flat note on Thursday as weak cues from Europe dampened sentiments moreover, profit booking in index heavyweights Reliance Industries and Infosys too led the downfall. However, the global cues were not supportive since beginning but the domestic markets bucked the trend keeping their head high for most part of the trade supported by encouraging weekly food inflation and attempted to break above the horizontal resistance line of 4,780 but erased all of the session’s gains as renewed selling pressure at higher levels forced it to close below 4,750.

Earlier, the market made a flat-to-cautious start but, gained its strength immediately following recovery in some Asian markets. On the domestic front the economic news once again remained better and the factory orders for the month of November rose by 1.8% from a decline of 0.2% in October. Market extended its gains after weekly food inflation extended the declining streak for the eighth week in a row plunged to the negative terrain to -3.36% from 0.42% of the previous week. Meanwhile, auto stocks rose as India Auto Expo 2012 began in New Delhi from January 5, 2012. Realty major DLF fell over 4% on reports of an unfavouable court order on a major project. In the mid noon trade, the local index touched its intraday high supported by rate sensitive Auto and banking space stocks as fall in weekly inflation raised hopes that the Reserve Bank of India (RBI) may cut interest rates in the forthcoming policy meet, which is to be scheduled on January 24. But, Nifty reverses course and dipped into the red in the final hour due to profit booking in heavyweights like RIL after the European stocks retreated before a French bond sale. Moreover, metal stocks reversed initial gains as LMEX, a gauge of six metals traded on the London Metal Exchange, dropped 2.17% on January 4, 2012. Finally, Nifty ended the day’s trade on a flat note.

On the global front, the US markets closed on a mixed note on Wednesday, as European worries weighed on good economic reports while, most of the Asian peers ended the day’s trade in the red on Thursday as concerns over Europe’s debt crisis returned to the forefront. Moreover, all the major European counterparts were trading in the red where major indices like CAC, DAX and FTSE were trading with a cut of over half a percent at this point of time. Back home, on NSE sectoral space CNX Realty losing the most, ending with a cut of 1.86% followed by CNX Energy down by 1.55% and CNX PSE down by 1.19% while, CNX Auto up 1.20% and Bank Nifty up by 0.55% remained top gainers. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 0189% and reached 25.91.

The India VIX witnessed contraction of 1.89% at 25.91 as compared to its previous close of at 26.41 on Wednesday.

The 50-share S&P CNX Nifty gained 0.30 points or 0.01% to settle at 4,749.95.

Nifty January 2012 futures closed at 4,758.10 at a premium of 8.15 points over spot closing of 4,749.95, while Nifty February 2012 futures were at 4,776.85 at a premium of 26.90 points over spot closing. The near month January 2012 derivatives contract expires on Thursday, January 25, 2012. Nifty January futures saw addition of 0.50 million (mn) units taking the total outstanding open interest (OI) to 21.22 mn units.

From the most active contract by contract value, Tata Motors January 2012 futures were at a discount of 0.05 point at 201.10 compared with spot closing of 201.15. The number of contracts traded was 16,763.

SBI’s January 2012 futures were at a discount of 8.00 point at 1682.00 compared with spot closing of 1690.00. The number of contracts traded was 27,062.

RIL January 2012 futures were at a premium of 3.60 points at 705.60 compared with spot closing of 702.00. The number of contracts traded was 29,192.

Axis Bank January 2012 futures were at a discount of 14.05 point at 855.00 compared with spot closing of 869.05. The number of contracts traded was 20,596.

M&M January 2012 futures were at a premium of 1.90 point at 652.20 compared with spot closing of 650.30. The number of contracts traded was 12,255.

Among Nifty calls, 4800 SP from the January month expiry was the most active call with an addition of 0.44 million.

Among Nifty puts, 4700 SP from the January month expiry was the most active put with an addition of 0.50 million.

The maximum Call OI outstanding for Calls was at 4800 SP (3.97 mn) and that for Puts was at 4700 SP (5.18 mn).

The respective Support and Resistance levels are: Resistance 4776.45 -- Pivot Point 4753.30 -- Support 4726.80.

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 MRPL 9.00, Lupin 4.00, Bank of India 3.00, Gitanjali 2.62, and Hexaware 2.00.

Among most active underlying, Reliance Industries witnessed an addition of 0.93 million of Open Interest in the January month futures contract followed by SBI which witnessed an addition of 0.16 million of Open Interest in the near month contract. Meanwhile Tata Motors witnessed an addition of 1.37 million in the January month futures. Also, ICICI Bank witnessed a contraction of 0.11 million in Open Interest in the January month contract. Finally, Axis Bank witnessed an addition of 0.06 million of Open Interest in the near month futures contract.