US debt relief helps Nifty to surpass 5,500 level

The local benchmark, Nifty witnessed a good day of trade and snapped the session higher by half a percent, over its crucial 5,500 level in line with Asian peers after US President Obama confirmed that lawmakers had reached a last-minute deal that would raise the country’s debt ceiling and avoid a catastrophic default. Earlier, the market made a gap up start tracking positive cues from global indices and surpassed its crucial 5,500 level in the initial trade. Though, afterwards, the local index pared some of its gains as index heavyweight reversed all of its initial gains. Market traded in the tight band till late morning trade as investors’ remained cautious after PM’s Economic Advisory Council (PMEAC) panel downgraded the country’s GDP growth target from the estimated 8.5% to 8.2% and the said that the central bank will have to continue with its tight monetary policy. Meanwhile, auto companies report mixed sales numbers for July month. Mahindra & Mahindra posted its highest monthly sales in July, up 41% at 39,633 units while, TVS Motor July sales rose 14% to 189,962 vehicles however, Maruti Suzuki, reported a 25.34% fall in total sales for July to 75,300 units. In the early noon trade market started its southward journey and breached its crucial 5,500 mark led by fall in metal stocks as JSW Steel plunged over 10% in trade, extending the 10% fall of the last two trading sessions, after the Supreme Court suspended all mining operations in the Bellary district of Karnataka till further orders. Moreover stocks like, Jindal Saw, SAIL, Nalco and Jindal Steel all ended with a cut in the range of 2.5-6%. But market, found strong support near its crucial 5,500 mark and started moving up side and regained its 5,500 mark led by buying in software stocks. Meanwhile, India’s exports grew by an impressive 46.45% to $29.21 billion in June, 2011, despite uncertainty in the US and European markets. Finally, Nifty snapped the day’s trade with a gain of about 35 points, firmly over its psychological 5,500 mark on the back of buying witnessed in ONGC, L&T and M&M in last hour of trade.

On the global front, the US markets remained on the declining path in last week and closed lower on Friday however, all the Asian equity indices finished Monday’s trade in the positive terrain on news that US president has strike a deal for raising US debt limit. Moreover, most of the European counterparts were trading in the positive terrain where CAC, DAX and FTSE were trading with a gain of about a percent at this point of time. Back home, broad based buying supported most of the sectoral indices on the NSE to settle in the positive territory with CNX Infra surging the most and ending with a gain of over a percent followed by CNX IT up 0.74% and CNX Pharma up 0.69% while, CNX PSU bank and CNX MNC down by 0.25% and 0.07% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 5% and reached 18.78, while S&P Nifty moved higher by 34.80 points or 0.63% to close at 5,516.80.

The India VIX witnessed a decline of 5.00% at 18.78 on Monday as compared to 19.77 on Friday 

The 50-share S&P CNX Nifty gained 34.80 points or 0.63% and settled at 5,516.80.

Nifty August 2011 futures closed at 5,528.55, at a premium of 11.75 point over spot closing of 5,516.80, while Nifty September 2011 futures were at 5,544.25 at a premium of 27.45 points over spot closing. The near month August 2011 derivatives contract expires on Thursday, August 25, 2011. Nifty August futures saw addition of 8.37% or 1.63 million (mn) units, taking the total outstanding open interest (OI) to 21.18 mn units.

From the most active contract by contract value, JSW Steel August 2011 futures closed at a premium of 4.00 points at 698.00 compared with spot closing of 694.00. The number of contracts traded was 42,234.

SBI's August 2011 futures were at a premium of 13.95 point at 2355.95 compared with spot closing of 2342.00. The number of contracts traded was 14,978.

Adani Enterprises August 2011 futures were at a discount of 1.10 at 639.70 compared with spot closing of 640.80. The number of contracts traded was 13,326.

ICICI Bank August 2011 futures were at a premium of 4.30 at 1044.30 compared with spot closing of 1040.00. The number of contracts traded was 14,324.

RIL August 2011 futures were at a premium of 5.20 at 836.70 compared with spot closing of 831.50. The number of contracts traded was 15,933.Among Nifty calls, 5600 SP from the August month expiry was the most active call with addition of 0.88 million or 18.33%.

Among Nifty puts, 5500 SP from the August month expiry was the most active put with addition of 1.07 million or 24.74%.

The maximum Call OI outstanding for Calls was at 5600 SP (5.71 mn) and that for Puts was at 5500 SP (5.39 mn).

The respective Support and Resistance levels are: Resistance 5550.32 -- Pivot Point 5518.38 -- Support 5484.87.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.09 for August -month contract.

The top five scrips with highest PCR on OI were IRB Infra 6.00, Tata Chemicals 3.00, Jindal Saw 2, Deccan Chronicle Holdings and JSW Energy 1.66.

Among most active underlying, JSW Steel witnessed an addition of 16.97% of Open Interest (OI) in the August month futures contract followed by Reliance witnessed an addition of 3.13% of Open Interest (OI) in the near month contract. Meanwhile State bank of India witnessed an addition of 6.16% of OI in the August month futures.