Nifty ends at 5-month high as July WPI figures spark rate cut hopes

Domestic benchmark index Nifty snapped the day’s trade near 5-month high surpassing its crucial 5,350 mark with a gain of over half a percent. The sentiments, after a cautious start, turned bullish shrugging off gloomy trade deficit data supported by lower than expected monthly inflation data for July. Moreover, the global cues too remained supportive as all the Asian peers ended the session in the positive trajectory as several board members of Bank of Japan in the last meeting said that the central bank should not dismiss any policy options in combating risks to the economy. European shares too traded jubilantly in the first half as slightly better than expected performances by the German and French economies in the second quarter eased concern about wider euro zone data that are likely to show the bloc sliding back towards recession.

The benchmark index started off the trade on a flattish note as market-men stayed on the safer side awaiting July inflation numbers. Moreover, the sentiments also got dampened and market touched its intraday low after India’s trade deficit widened to $15.5 billion in July, as exports recorded their sharpest fall since November 2011, reflecting a weakening of demand from key Western markets which contributed to a slowdown in Asia’s third-largest economy. But, market took a u-turn and regained its positive trajectory supported by 32-month low inflation data. The wholesale price index (WPI), India’s main inflation gauge, unexpectedly slipped at 6.87% for the month of July, its lowest since January 2010, as compared to 7.25% (Provisional) for the previous month and 9.36% during the corresponding month of the previous year. The fuel group inflation came in at 5.98% versus 10.27% during the previous month. Food article inflation lowered to 10.06% compared to 10.81% and the primary article inflation was at 10.39% versus 10.46% on a month on month basis. Moreover, firm opening in European counters too supported the sentiments and market continued its rally till end. Meanwhile, Reliance Power and Reliance Infrastructure reported better than expected Q1 numbers, which also aided the sentiments. However gains remained capped as poor Q1 numbers from Hindalco Industries, Housing Development & Infrastructure (HDIL) and National Aluminium Company weighed down the sentiments. Finally, Nifty snapped the day’s trade comfortably over its crucial 5,350 level with a gain of over thirty points.

Meanwhile, most of the sectoral indices on the NSE were settled in the green, Bank Nifty remained the major gainer, up 1.13% followed by CNX PSU Bank up 0.94% and CNX Metal up by 0.88% while CNX Realty and CNX Pharma declined 0.81% and 0.36% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 2.31% and reached 15.64.

The India VIX witnessed contraction of 2.31% at 15.64 as compared to its previous close of at 16.01 on Monday. 

The 50-share S&P CNX Nifty gained 32.45 points or 0.61% to settle at 5380.35.

Nifty August 2012 futures closed at 5406.85 on Tuesday at a premium of 26.50 points over spot closing of 5,380.35, while Nifty September 2012 futures were at 5433.05 at a premium of 52.70 points over spot closing. Nifty August futures saw an addition of 0.66 million (mn) units taking the total outstanding open interest (OI) to 25.95 mn units. The near month August 2012 derivatives contract will expire on Thursday i.e. August 30, 2012.

From the most active contracts, Tata Motors August 2012 futures were at a premium of 0.40 points at 236.20 compared with spot closing of 235.80. The number of contracts traded was 14,175.

Tata Steel August 2012 futures were trading at a premium of 2.35 points at 408.35 compared with spot closing of 406.00. The number of contracts traded was 22,523.

Reliance Industries August 2012 futures were at a premium of 3.25 point at 803.65 compared with spot closing of 800.40. The number of contracts traded was 9,023.

ICICI Bank August 2012 futures were at a premium of 3.25 points at 974.25 compared with spot closing of 971.00. The number of contracts traded was 16,808.

United Spirits August 2012 futures were at a premium of 6.80 point at 893.80 compared with spot closing of 887.00. The number of contracts traded was 19,365. 

Among Nifty calls, 5500 SP from the August month expiry was the most active call with an addition of 0.40 million open interest.

Among Nifty puts, 5000 SP from the August month expiry was the most active put with an addition of 0.12 million open interest.

The maximum OI outstanding for Calls was at 5500 SP (8.97 mn) and that for Puts was at 5000 SP (10.53 mn).

The respective Support and Resistance levels are: Resistance 5402 -- Pivot Point 5365.4 -- Support 5343.75.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.63 for August -month contract.

The top five scrips with highest PCR on OI were Orient Bank 4.00, YES Bank 2.08, UNIPHOS 1.85, PTC 1.75 and Ambuja Cement 1.63.