Bounce back in last leg of trade helps Nifty to reclaim 5,200 mark

Prolonging its previous session’s rally, market witnessed a tremendous recovery in second half of the day’s trade on Wednesday and Nifty snapped the trade with over half a percent gains recapturing its crucial 5,200 mark amid firm European cues, led by index heavyweight Reliance Industries following the commencement of its buyback offer. European stocks opened the session in the green on Chinese manufacturing data offsetting Greece’s struggle to reach a pact with creditors. Back home, the overwhelming manufacturing PMI numbers, which showed Indian manufacturing sector business conditions improved at fastest rate in eight months were outweighed by reports that India’s trade deficit widened in December to $12.7 billion from $8.0 billion a year earlier as export growth slowed due to falling global demand.

Initially, domestic market made flat to negative start as investors booked profits after previous sessions’ rally with HDFC, ICICI Bank and Infosys led the losses in early trade. Afterwards market extended its losses as sentiments were weighed down by telecom stocks, which remained under intense selling pressure as the telecom ministry issued show-cause notices to five private operators including, Bharti Airtel, Vodafone and RCom, for under reporting revenues, as per a special audit report, for assessment years 2006 to 2008. Stocks of Bharti Airtel, IDEA Cellular and MTNL edged lower in the trade. Market traded range bound till early noon trade as losses were capped by Auto stocks. The CNX Auto index has jumped about two percent buoyed by encouraging sales figures by Maruti Suzuki, Mahindra & Mahindra and TVS Motors in January. The index touched its intraday low near its psychological 5,150 level in mid noon trade but, it proved as strong supports for the index and the benchmark smartly rebounded in the late noon on the back of firm European cues post Chinese PMI data moreover, sustained buying visible in the auto, capital goods and metal stocks too aided the sentiments. Finally, Nifty snapped the terrific day of trade comfortably over its crucial 5,200 mark with a gain of 0.70 percentage points.

On the global front, the US markets though ended mixed on the last trading day of January but managed to mark best January in 15 years while, most of the Asian equity indices were modestly higher on Wednesday as encouraging Chinese manufacturing data tempered concerns over downbeat US economic reports, while earnings disappointments in Japan capped stocks there. Moreover, all the European counterparts were trading in the positive terrain at this point of time. Back home, most of the sectoral indices on the NSE were settled in the green, CNX Metal remained the major gainer, up 2.96% followed by CNX Media up 2.12% and CNX Auto up by 1.92% while CNX Pharma declined 0.53% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 1.02% and reached 22.89.

The India VIX witnessed an addition of 1.02% at 22.89 as compared to its previous close of at 22.66 on Tuesday.

The 50-share S&P CNX Nifty accumulated 36.45 points or 0.70% to settle at 5235.70.

Nifty February 2012 futures closed at 5,262.15 at a premium of 26.45 points over spot closing of 5,235.70, while Nifty March 2012 futures were at 5,290.60 at a premium of 54.90 points over spot closing. The near month February 2012 derivatives contract expires on Thursday, February 23, 2012. Nifty February futures saw contraction of 0.56 million (mn) units taking the total outstanding open interest (OI) to 21.80 mn units.

From the most active contract by contract value, Tata Motors February 2012 futures were flat at 248.60 compared with spot closing of 248.60. The number of contracts traded was 18,294.

DLF February 2012 futures were at a premium of 1.65 point at 218.75 compared with spot closing of 217.10. The number of contracts traded was 15,539.

Tata Steel February 2012 futures were at a discount of 2.95 points at 470.95 compared with spot closing of 473.90. The number of contracts traded was 23,810.

HDFC February 2012 futures were at a premium of 3.90 point at 694.50 compared with spot closing of 690.60. The number of contracts traded was 12,144.

ICICI Bank February 2012 futures were at a premium of 5.75 point at 894.75 compared with spot closing of 889.00. The number of contracts traded was 35,002.

Among Nifty calls, 5300 SP from the February month expiry was the most active call with an addition of 0.36 million open interest.

Among Nifty puts, 5000 SP from the February month expiry was the most active put with an addition of 0.63 million open interest.

The maximum OI outstanding for Calls was at 5300 SP (5.88 mn) and that for Puts was at 5000 SP (6.13 mn).

The respective Support and Resistance levels are: Resistance 5267.2 -- Pivot Point 5213.1-- Support 5181.6.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.43 for February -month contract.

The top five scrips with highest PCR on OI were Polaris 3.80, Canara bank 2.25, Welcorp 2.24, Sun Pharma 2.03 and India Cement 2.00.

Among most active underlying, IFCI witnessed contraction of 0.6 million of Open Interest in the February month futures contract followed by Tata Motors which witnessed contraction of 0.12 million of Open Interest in the near month contract. Meanwhile JP Associates witnessed an addition of 1.17 million in the February month futures. Also, IDFC witnessed an addition of 0.09 million in Open Interest in the February month contract. Finally, Hindalco witnessed a contraction of 1.80 million of Open Interest in the near month futures contract.