Bulls continue to show aggression; Nifty reclaims 5,200 mark

Sentiment remained bullish for third consecutive day with Nifty recapturing 5,200 mark, led by index heavyweights Reliance Industries and Infosys. The market registered its fourth straight weekly gain on back of aggressive buying from foreign institutional investors (FII) who have injected $1.54 billion this month so far. Moreover, the Indian rupee appreciated by 72 paise to 49.34 a dollar. too supporting the sentiments.

Earlier, market made a positive start hitting 10-1/2-week highs on continued buying by funds and retailers amid a firming trend in Asian markets. Moreover, hopes of easing liquidity in the market after the RBI cut cash reserve ratio by 0.50 percentage point in its policy review on Tuesday too buoyed the sentiment.  However, in the mid morning trade the index trimmed most of its initial gains due to profit taking in financial and FMCG stocks. But, benchmark regained its strength in the noon trade as sentiment got boosted after data showed food inflation remained in the negative terrain for fourth straight week. The weekly food inflation ending January 14, 2012 moderated to -1.03% from its previous levels of -0.42% for the week ended January 7. Meanwhile, Metal stocks like Sterlite, Tata Steel, Hindalco Industries and Hindustan Zinc surged between 1-6% after LMEX, a gauge of six metals traded on the London Metal Exchange (LME), rose 2.4% to close at $3,777 on January 26. Market continued its jubilant run and recaptured its crucial 5,200 mark in late trade supported by IT stocks like Infosys and TCS which gained by nearly 1-3% each. Technology stocks rose after the Fed indicated that it would keep rates in the US at ultra-low levels until late 2014 to support US economic recovery. US is the biggest outsourcing market for Indian IT firms. Finally, Nifty snapped the session over its psychological 5,200 mark, garnering about a percentage point.

On the global front, the US markets closed lower overnight, after new home sales fell unexpectedly in December and dropped 6.2% to a record low in 2011 while, Asian markets rose Friday on tentative hopes that Greece will be able to agree a deal with creditors on writing down some of its debt. Moreover, European counterparts were trading mixed at this point of time. Back home, most of the sectoral indices on the NSE settled in the positive territory with CNX Energy gaining the most, up 3.12% followed by CNX Media up by 2.74% and CNX Metal up by 2.67% while, CNX Realty and CNX FMCG declined by 2.44% and 1.27% in the trade, respectively. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 3.23% and reached 21.70.

The India VIX witnessed an addition of 3.24% at 21.70 as compared to its previous close of at 21.02 on Wednesday.

The 50-share S&P CNX Nifty gained 46.40 points or 0.90% to settle at 5,204.70.

Nifty February 2012 futures closed at 5,212.80 at a premium of 8.10 points over spot closing of 5,204.70, while Nifty March 2012 futures were at 5,237.95 at a premium of 33.25 points over spot closing. The near month February 2012 derivatives contract expires on Thursday, February 23, 2012. Nifty February futures saw an addition of 0.12 million (mn) units taking the total outstanding open interest (OI) to 23.45 mn units.

From the most active contract by contract value, Tata Motors February 2012 futures were at a discount of 1.50 point at 238.60 compared with spot closing of 240.10. The number of contracts traded was 15,508.

SBI’s February 2012 futures were at a discount of 14.65 point at 2020.15 compared with spot closing of 2034.80. The number of contracts traded was 22,338.

L&T February 2012 futures were at a discount of 8.05 points at 1377.95 compared with spot closing of 1386.00. The number of contracts traded was 14,844.

RIL February 2012 futures were at a premium of 7.85 point at 824.85 compared with spot closing of 817.00. The number of contracts traded was 23,150.

ICICI Bank February 2012 futures were at a discount of 1.10 point at 888.85 compared with spot closing of 889.95. The number of contracts traded was 19,712.

Among Nifty calls, 5200 SP from the Feburary month expiry was the most active call with an addition of 0.11 million in open interest.

Among Nifty puts, 4800 SP from the February month expiry was the most active put with addition of 0.48 million in open interest.

The maximum OI outstanding for Calls was at 5200 SP (4.45 mn) and that for Puts was at 4800 SP (5.34mn).

The respective Support and Resistance levels are: Resistance 5227 -- Pivot Point 5194.7 -- Support 5172.4.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.49 for February-month contract.

The top five scrips with highest PCR on OI were Canara Bank 4.50, Patni 2.50, Sun Pharmaceuticals 2.08, MRPL 2.00 and Areva T&D 2.00.

Among most active underlying as per Open Interest, Tata Motors witnessed an addition of 2.61 million for the Open Interest in the February month futures contract followed by Hindalco Industries which witnessed an addition of 1.13% of Open Interest in the near month contract. Meanwhile DLF witnessed an addition of 0.89% for the open interest in the J February month futures. Also, Tata Steel witnessed a contraction of 0.39 million in Open Interest in the February month contract. Finally, Reliance witnessed contraction of 0.76 million of Open Interest in the near month futures contract.