Nifty reclaims 5,400 mark led by rate sensitives

Nifty continued its consolidation mood on second consecutive day and snapped the day’s trade with a gain of about half a percent led by rate sensitive shares after India’s headline inflation for January 2012 which fell to a 2-year low of 6.55 percent which may prompt Reserve Bank of India to cut policy rates in coming months. Moreover, the result announcement by Tata Motors too supported the sentiments after the announcement of better-than-expected third quarter numbers. Tata Motors reported 40.5% rise in quarterly profit, as strong sales at its Jaguar Land Rover unit offset rising input costs.

Earlier, market opened on a soft note following weak Asian markets as Moody’s downgraded Italy, Portugal, Spain, Slovakia, Slovenia and Malta, and warned it may cut other top-notch ratings. But, the index immediately turned in the green and Nifty recaptured its crucial 5,400 mark as sentiments got support from a latest consumer survey by RBI which showed that the number of people who felt that their financial circumstances have improved went up marginally to 57.1 percent in December, from 56 percent in September. Afterwards, the benchmark traded in the tight band near its psychological 5,400 level. Meanwhile, the encouraging WPI inflation numbers for January provided the much needed support to the local markets and prevented downside chances for the bourses. The wholesale price index slowed to its lowest level in more than two years in January to 6.55% against 7.47% in December. Moreover, shares of Infrastructure and real estate companies rallied on the bourses on hopes that the Reserve Bank of India (RBI) may cut interest rates in March if inflation stays soft. Lanco Infratech, NCC, GVK Power and Infrastructure, Indiabulls Real, Hindustan Construction Company and Pratibha Industries from the infra and real estate sectors gained more than 5 percent. Decent trade in European counters too aided the sentiments and Nifty ended range bound session with a gain of about 25 points.

On the global front, The US markets edged higher on Monday while, Asian stock markets snapped the day’s trade on mixed note on Tuesday after ratings agency Moody’s slapped credit downgrades on six European Union countries due to the region's weak economic outlook and uncertain attempts to implement reforms. Moreover, most of the European counterparts were trading in the green at this point of time. Back home, most of the sectoral indices on the NSE settled in the positive territory with CNX PSU Bank gaining the most, up by 2.69% followed by CNX Realty up by 2.32% and CNX Auto up by 2.10% while, CNX Pharma and CNX Energy down by 1.06% and 0.33% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, dipped 4.21% and reached 22.71.

The India VIX witnessed a decline of 4.22% at 22.71 as compared to its previous close of at 23.71 on Monday.

The 50-share S&P CNX Nifty added 25.85 points or 0.48% to settle at 5,416.05.

Nifty February 2012 futures closed at 5,452.20 at a premium of 36.15 points over spot closing of 5,416.05, while Nifty March 2012 futures were at 5,486.50 at a premium of 70.45 points over spot closing. The near month February 2012 derivatives contract expires on Thursday, February 23, 2012. Nifty February futures saw contraction of 0.41 million (mn) units taking the total outstanding open interest (OI) to 25.14 mn units.

From the most active contract, Tata Motors February 2012 futures were at a premium of 0.9 point at 273.55 as compared with spot closing of 272.65. The number of contracts traded was 28,983.

Reliance Communications February 2012 futures were at a premium of 0.40 point at 99.70 compared with spot closing of 99.30. The number of contracts traded was 15,534.

DLF February 2012 futures were at a premium of 0.45 point at 235.15 compared with spot closing of 234.70. The number of contracts traded was 11,158.

Hindalco February 2012 futures were at a premium of 0.25 point at 161.70 compared with spot closing of 161.45. The number of contracts traded was 12,846.

Tata Steel February 2012 futures were at a premium of 1.80 point at 488.90 compared with spot closing of 487.10. The number of contracts traded was 18,032.

Among Nifty calls, 5400 SP from the February month expiry was the most active call with a contraction of 0.43 million open interest. 

Among Nifty puts, 5300 SP from the February month expiry was the most active put with an addition of 0.68 million open interest.

The maximum OI outstanding for Calls was at 5400 SP (5.41 mn) and that for Puts was at 5300 SP (7.79 mn).

The respective Support and Resistance levels are: Resistance 5436.75-- Pivot Point 5407.35-- Support 5386.65.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.79 for February -month contract.

The top five scrips with highest PCR on OI were Federal Bank 17.00, Indian Overseas Bank 9.67, Canara Bank 8.17, Lupin 4.00 and Kotak Bank 3.83.

Among most active underlying, IFCI witnessed an addition of 0.14 million of Open Interest in the February month futures contract followed by Tata Motors which witnessed an addition of 0.51 million of Open Interest in the near month contract. Meanwhile Reliance Communication witnessed an addition of 0.37 million in the February month futures. Further, JP Associate witnessed an addition of 0.29 million in Open Interest in the February month contract. Finally, Hindalco Industries witnessed an addition of 0.19 million of Open Interest in the near month futures contract.