Railway budget fails to cheer market; Nifty rises over 0.50%

Key benchmark -- Nifty -- continued its northward journey for fourth straight day in a row and ended the session with a gain of over half a percent on Wednesday ahead of the RBI credit policy and Economic Survey tomorrow. Market opened on a strong note tracking positive global cues but later turned volatile post the Railway Budget announcement and slightly higher than expected inflation data for February. Moreover, global cues remained supportive as Asian and European markets were up after the Federal Reserve bolstered confidence in the US banking system and raised its economic assessment. Back home, banking and capital goods shares surged on hopes that the central bank may announce reduction in interest rates.

The market made gap-up opening hitting its highest level in more than two and a half weeks at the onset of the trading session supported by global leads. The FOMC said that they have decided to keep the federal funds rate at zero to a quarter of a percent at least through late 2014. Afterwards, the barometer index, NSE Nifty, fell way below the psychological 5,500 mark soon after moving near that level at the start of the trading session as investors remained cautious ahead of Railway Budget announcement while, slightly higher than expected inflation data for February too dampened the investors’ sentiments. Inflation for the month of February came in at 6.95% versus 6.55% month-on-month. Primary article inflation increased at 6.28% versus 2.25% month-on-month basis. Post Railway Budget announcement the index witnessed a steep fall of about 45 points and touched its intraday low breaching its crucial 5,450 mark in early noon trade. Overall the Railway Budget 2012-13 became a non-event for the market. The minister while presenting his maiden budget put more focus on safety standards and modernization of railway, though he hiked fares for the first time in 10 years. For AC 3 tier- 10 paise per km, AC 2 tier- 15 paise per km, 2nd class- 3 paise per km, First class AC 30 paise per km; suburban fares up 2 paise per km; Platform ticket up from Rs 3 to Rs 5. In the mid afternoon trade, the index regained strength as banking and capital goods stocks logged in smart gains on hopes that the central bank might cut interest rates in its credit policy which is to be announced tomorrow. Moreover, firm European counters too aided the sentiments. Finally, Nifty snapped the day’s trade with a gain of over half a percent point recapturing 4,450 mark.

Meanwhile, most of the sectoral indices on the NSE were settled in the green, CNX PSU Bank remained the major gainer, up 2.22% followed by Bank Nifty up 1.90% and CNX PSE up by 1.32% while CNX Realty and CNX IT declined 0.92% and 0.48% in the trade respectively. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, rose 0.12% and reached 24.72.

The India VIX witnessed contraction of 0.03% at 24.72 as compared to its previous close of at 24.75 on Tuesday.

The 50-share S&P CNX Nifty gain 34.40 points or 0.63% to settle at 5463.90.

Nifty March 2012 futures closed at 5,506.1 at a premium of 42.2 points over spot closing of 5,463.90, while Nifty April 2012 futures were at 5,545.1 at a premium of 81.2 points over spot closing. The near month March 2012 derivatives contract expires on Thursday, March 29, 2012. Nifty March futures saw an addition of 0.68 million (mn) units taking the total outstanding open interest (OI) to 25.77 mn units.

From the most active contract, Tata Motors March 2012 futures were at a premium of 0.35 point at 290.35 compared with spot closing of 290.00. The number of contracts traded was 13,006.

HDIL March 2012 futures were at a premium of 1.25 point at 109.45 compared with spot closing of 108.20. The number of contracts traded was 14,962.

Tata Steel March 2012 futures were at a premium of 1.30 at 462.8 compared with spot closing of 461.50. The number of contracts traded was 13,787.

Reliance Industries March 2012 futures were at a premium of 4.9 point at 820.55 compared with spot closing of 815.65. The number of contracts traded was 16,195.

ICICI Bank March 2012 futures were at a premium of 7.95 point at 962.75 compared with spot closing of 954.80. The number of contracts traded was 22,798.

Among Nifty calls, 5600 SP from the March month expiry was the most active call with an addition of 0.003 million open interest.

Among Nifty puts, 5200 SP from the March month expiry was the most active put with an addition of 0.87 million open interest.

The maximum OI outstanding for Calls was at 5600 SP (5.60mn) and that for Puts was at 5200 SP (9.04mn).

The respective Support and Resistance levels are: Resistance 5496.26-- Pivot Point 5467.03 -- Support 5434.66.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.32 for March -month contract.

The top five scrips with highest PCR on OI were ABG Ship 8.90, DR Reddy 4.39, JP Power 4.14, Maruti 2.04 and Siemems 1.70

Among most active underlying, Suzlon witnessed contraction of 1.54 million of Open Interest in the March month futures contract followed by IFCI which witnessed an addition of 2.35 million of Open Interest in the near month contract. Meanwhile, LITL witnessed contraction of 2.76 million in the March month futures. Also, GVKPIL witnessed contraction of 3.00 million in Open Interest in the March month contract. Finally, RCOM witnessed contraction of 0.80 million of Open Interest in the near month futures contract.