Final hour recovery helps Nifty to reclaim 5,400 mark

Domestic index S&P CNX Nifty on Thursday shot up in the last hour of trade, after languishing in the red for most of the day and snapped the day’s trade with a gain of about a percent recapturing its crucial 5,400 mark. Sentiments turned in the final hour of trade and bulls came back in action following positive opening in European counters as investors bet on a positive outcome to Greek reform talks needed for a fresh bailout. Moreover, continued foreign fund inflows too boosted the investors’ confidence, with banks and automakers leading the rally helping Nifty to reclaim psychological 5,400 mark.

Initially, the Indian benchmark made a quite opening with negative bias following weak Asian markets. Afterwards, market witnessed a choppy trade in first half due to lack of fresh buying at higher levels and as investors chose to stay on sidelines as Greece tries to strike a bail out deal to avoid default. Disappointing Chinese inflation reading for January and Japan’s weak core machinery orders data too raised concerns over global growth outlook. Back home, the sentiment also got dampened after finance minister Pranab Mukherjee voiced concerns over mounting subsidy bill, which may cross Budget estimate by Rs 1 lakh crore in 2011-12. In the noon trade, market pared most of its initial losses and traded near its neutral line in the tight band as Asian markets recovered a great deal from the intraday lows tracking the European stock futures. But it was the last leg of trade where market took a sharp jump of over 60 points following strong opening in European counters. Moreover, sentiments got support after global rating agency Fitch affirmed that India is facing cyclical slowdown rather than a structural downturn. Fitch stated that this may further ease inflation, which appears to have passed its peak and thereby giving room to RBI to move to a more accommodative monetary policy, after recent increases in policy rates. Finally, Nifty snapped the terrific day of trade comfortably over its crucial 5,400 mark with a gain of over 0.80 percentage points.

On the global front, the US markets ended with mild gains overnight while, Asian stocks snapped the day’s trade mostly in the negative terrain on Thursday after data showed inflation in China was heating up again, complicating efforts by Beijing to stimulate the world’s No. 2 economy. Moreover, most of 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 2198% followed by CNX Realty up 1.95% and Bank Nifty up by 1.82% while CNX Pharma down by 0.22% remained the lone loser in the trade, respectively. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 4.00% and reached 23.30.

The India VIX witnessed a contraction of 4.00% at 23.30 as compared to its previous close of at 24.27 on Wednesday.

The 50-share S&P CNX Nifty accumulated 44.20 points or 0.82% to settle at 5412.35.

Nifty February 2012 futures closed at 5,437.05 at a premium of 24.70 points over spot closing of 5,412.35, while Nifty March 2012 futures were at 5,465.60 at a premium of 53.25 points over spot closing. The near month February 2012 derivatives contract expires on Thursday, February 23, 2012. Nifty February futures saw an addition of 0.58 million (mn) units taking the total outstanding open interest (OI) to 26.24 mn units.

From the most active contract, Tata Motors February 2012 futures were at a premium of 1.25 point at 258.55 compared with spot closing of 257.30. The number of contracts traded was 17,416.

DLF February 2012 futures were at a premium of 1.80 point at 234.40 compared with spot closing of 232.60. The number of contracts traded was 18,300.

Hindalco February 2012 futures were at a premium of 0.90 point at 159.95 compared with spot closing of 159.05. The number of contracts traded was 29,160.

Tata Steel February 2012 futures were at a discount of 0.20 point at 453.35 compared with spot closing of 453.55. The number of contracts traded was 27,243.

HDIL February 2012 futures were at a premium of 0.80 point at 98.35 compared with spot closing of 97.55. The number of contracts traded was 13,172.

Among Nifty calls, 5500 SP from the February month expiry was the most active call with a contraction of 0.23 million open interest.

Among Nifty puts, 5200 SP from the February month expiry was the most active put with a contraction of 0.93 million in open interests.

The maximum OI outstanding for Calls was at 5500 SP (6.22 mn) and that for Puts was at 5200 SP (6,76mn).

The respective Support and Resistance levels are: Resistance 5444.2 -- Pivot Point 5391.55 -- Support 5359.7.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.75 for February-month contract.

The top five scrips with highest PCR on OI were Max India 131, Areva T&D 27.33, 27.33, Indian Overseas Bank 10,00 , OnMobile 8.00 and Canara Bank 7.50.

Among most active underlying, IFCI witnessed an addition of 0.68 million of Open Interest in the February month futures contract followed by Tata Motors which witnessed an addition of 1.40 million of Open Interest in the near month contract. Also, Reliance Communication witnessed an addition of 0. 46 million in Open Interest in the February month contract. Meanwhile Hindalco Industries witnessed an addition of 0.12 million in the February month futures. Finally, DLF witnessed a contraction of 0.93 million of Open Interest in the near month futures contract.