Nifty snaps three days losing streak on rate cut hopes

Snapping three day’s losing streak, the domestic index S&P CNX Nifty ended the day’s trade with a marginal gain of 0.14%, tad below its crucial 4,850 mark. Though, market traded in the red for most part of the day’s trade but, recovery in second half, on the back of bargain hunting and short-covering in blue-chip counters, helped the market to end in the positive terrain. However, global cues remained subdued as the US markets slumped on Friday, witnessing their weakest intraday close of the year on getting unexpectedly weak jobs report, the feeble economic news from Europe and China too weighed on the sentiments. Moreover, sentiments remained subdued in the Asian region for fourth consecutive day of trade and all the Asian counters snapped the day’s trade in the negative terrain on Monday on concern of slowing global economic growth. Back home, strength in the European markets and hopes of a rate cut by the Reserve Bank later this month drove stocks higher in the last hour of trade.

Earlier, the Indian market made a gap-down opening tracking weakness in global markets. The weak jobs report from US, the feeble economic news from Europe and China weighed on the investors’ sentiment. Market extended its downfall breaching its crucial 4,800 mark as sentiments remained damaged as Metal stocks edged lower in the morning trade on worries of a weakening domestic and global demand for metals after disappointing manufacturing data from all parts of the world. Afterwards, market traded near its crucial 4,800 mark till early noon trade as weakness persists across the globe. The index, thereafter, started recovering gradually on comment from Reserve Bank of India’s (RBI) Deputy Governor Subir Gokarn that global oil prices as well as declining core inflation and growth in India gave the RBI room to adjust interest rates. At the same time, rate sensitives like Realty, Banking, Auto and Infra stocks drove the market higher and Nifty regained its crucial 4,800 mark. Market continued its recovery on track on news that India’s monsoon rains are likely to hit the southern Kerala coast in two days, easing concerns about the onset delay threatening plantings of summer crops such as rice, soybean and cotton in the farm-dependent economy. Moreover, fertilizer manufacturing companies like RCF, National Fertilizers and Zuari Industries closed with handsome gains ahead of arrival of the monsoon season. Recovery in European counters after a flattish opening too boosted the sentiments. Meanwhile, Aviation stocks also took off after the civil aviation ministry proposed to slash state taxes on jet fuel, which may significantly bring down costs for ailing local airlines that are reeling under a debt load of $20 billion and annual losses of $2 billion. Softening crude prices will also revive hopes of another cut in ATF prices. In the final hour of trade, Nifty fast-track its run and ended the session with a marginal gain near its crucial 4,850 mark.

Meanwhile, on the NSE, CNX FMCG losing the most, ending with a cut of over one and a half percent followed by CNX Metal down by 0.72% and CNX Pharma down by 0.71%, while CNX Realty up by 1.78%, CNX Bank up by 1.02% and CNX PSU Bank up by 1% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 4.37% and reached 25.60.

The India VIX witnessed contraction of 4.37% at 25.60 as compared to its previous close of at 26.77 on Friday.

The 50-share S&P CNX Nifty gain 6.55 by point or 0.14% to settle at 4848.15.

Nifty June 2012 futures closed at 4,840.50 at a discount of 7.65 points over spot closing of 4,848.15, while Nifty July 2012 futures were at 4,854.20 at a premium of 6.05 points over spot closing. The near month June 2012 derivatives contract will expire on Thursday i.e. June 28, 2012. Nifty June futures saw an addition of 0.51 million (mn) units taking the total outstanding open interest (OI) to 15.89 mn units.

From the most active contract, Tata Motors June 2012 futures were at a premium of 1.00 point at 230.30 compared with spot closing of 229.30. The number of contracts traded was 23,936.

DLF June 2012 futures were at a premium of 0.30 point at 186.90 compared with spot closing of 186.60. The number of contracts traded was 16,468.

Tata Steel June 2012 futures were at a discount of 9.00 points at 397.10 compared with spot closing of 406.10. The number of contracts traded was 9,358.

Pantaloon Retail June 2012 futures were at a premium of 0.60 point at 149.70 compared with spot closing of 149.10. The number of contracts traded was 7,597.

ICICI Bank June 2012 futures were at a premium of 1.70 point at 794.60 compared with spot closing of 792.90. The number of contracts traded was 17,981.

Among Nifty calls, 5000 SP from the Jun month expiry was the most active call with an addition of marginal open interest.

Among Nifty puts, 4500 SP from the Jun month expiry was the most active put with contraction of 0.08 million open interest.

The maximum OI outstanding for Calls was at 5000 SP (4.83 mn) and that for Puts was at 4500 SP (6.50 mn).

The respective Support and Resistance levels are: Resistance 4880.85-- Pivot Point 4825.6--Support 4792.9.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.46 for Jun -month contract.

The top five scrips with highest PCR on OI were ABG Ship 7.33, India cement 2.00, Fortis 1.25, Bajaj-Auto 1.17 and Siemens 1.09.

Among the most active underlying, Suzlon witnessed an addition of 5.40 million of Open Interest in the June month futures contract followed by IFCI which witnessed a contraction of 0.12 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 0.46 million in the June month futures. Also, Tata Motors witnessed contraction of 0.43 million in Open Interest in the June month contract. Finally, Jaiprakash Associates witnessed an addition of 0.40 million of Open Interest in the near month futures contract.