Nifty makes remarkable recovery after GAAR deferred by a year

After trading in the red for most part of the day’s trade, sentiments turned bullish in the second half of the session as investors got shy of relief after Finance Minister Pranab Mukherjee announced that the implementation of General Anti-Avoidance Rules (GAAR) would be deferred by one year. Nifty ended the day’s trade in the positive terrain with a gain of over half a percentage point, recapturing its crucial 5,100 mark. However, global cues remained subdued as the US markets went for sharp sell-off on Friday on getting lower than expected jobs number while, all the Asian peers shut shop in the red after elections results in Greece and France heightened uncertainty about Europe’s ability to solve its debt crisis. European counters too were exhibiting the subdued trade at this point of time. Back home, the Indian rupee too recovered by 52 paise to 52.95 a dollar.

Earlier, the domestic market made a gap-down start as global risk assets sold off after elections in Greece and France fuelled questions on their austerity policies. Moreover, the investors remained concerned about a review of the government’s tax treaty with Mauritius along with the GAAR issue in the initial trade. Market opened below the crucial 5,050 mark and gradually breached the 5,000 mark hindered by Banking stocks which continued their southbound journey after the Reserve Bank of India (RBI) announced guidelines for implementation of the Basel III norms. However, the 5,000 mark proved to be a very good support level for Nifty as market traded near that level till early noon trade. Afterwards, market started recovering post Finance Minister’s announcement regarding GAAR issue. Banking stocks too witnessed recovery, stocks like ICICI Bank and State Bank of India surged over one and a half percent. Moreover, better than expected Q4 numbers from HDFC too supported the sentiments. Meanwhile, jewellery stocks like Titan Industries and Gitanjali Gems edged higher in the trade after finance minister has withdrawn levy on all branded and non-branded jewellery. The benchmark continued its exceptional recovery and regained its important 5,050 mark in mid noon trade. In the last leg of trade, the index continued its jubilant run regaining psychological 5,100 mark helped by Sotu stocks which also bounced back in the second half. Finally Nifty ended the day’s trade near its intraday high with a gain of over half a percent.

Meanwhile, most of the sectoral indices on the NSE settled in the positive territory with CNX Infra gaining the most, up 2.58% followed by CNX Metal up by 1.53% and CNX Auto up by 1.30% while, CNX FMCG and CNX Pharma declined by 0.93% and 0.45% in the trade, respectively. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, tumbled 4.26% and reached 20.22.

The India VIX witnessed contraction of 4.26% at 20.22 as compared to its previous close of at 21.12 on Friday.

The 50-share S&P CNX Nifty gain 27.30 points or 0.54% to settle at 5,114.15.Nifty May 2012 futures closed at 5125.95 at a premium of 11.80 points over spot closing of 5114.15, while Nifty June 2012 futures were at 5141.15 at a premium of 27.00 points over spot closing. The near month May 2012 derivatives contract will expire on Thursday i.e. May 31, 2012. Nifty May futures saw contraction of 0.38 million (mn) units taking the total outstanding open interest (OI) to 18.49 mn units.

From the most active contract, Tata Motors May 2012 futures were at a discount of 2.45 point at 307.05 compared with spot closing of 309.50. The number of contracts traded was 16,985.

HDIL May 2012 futures were at a premium of 0.25 point at 75.60 compared with spot closing of 75.35. The number of contracts traded was 10,875.

BHEL May 2012 futures were at a premium of 2.00 points at 227.95 compared with spot closing of 225.95. The number of contracts traded was 11,047.

Tata Steel May 2012 futures were flat compared with spot closing of 442.30. The number of contracts traded was 17,003.

Reliance Industries May 2012 futures were at a discount of 2.65 point at 712.85 compared with spot closing of 715.50. The number of contracts traded was 16,856.  

Among Nifty calls, 5300 SP from the May month expiry was the most active call with an addition of 0.30 million open interest.

Among Nifty puts, 5000 SP from the May month expiry was the most active put with contraction of marginal in open interest.

The maximum OI outstanding for Calls was at 5300 SP (5.64mn) and that for Puts was at 5000 SP (6.65mn).

The respective Support and Resistance levels are: Resistance 5163.26-- Pivot Point 5075.63-- Support 5026.51.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.97 for May -month contract.

The top five scrips with highest PCR on OI were ABG Ship 52.00, MRPL 2.00, Asian Paint 1.67, Grasim 1.63, and TCS 1.60.

Among the most active underlying, Suzlon witnessed an addition of 0.10 million of Open Interest in the April month futures contract followed by IFCI which witnessed an addition of 0.08 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 0.32 million in the April month futures. Also, UNITECH witnessed an addition of 4.99 million in Open Interest in the April month contract. Finally, JP Associates Infra witnessed an addition of 0.27 million of Open Interest in the near month futures contract.