Recovery in late trade helps Nifty to snap two days losing streak

Snapping its two days losing streak, domestic index S&P CNX Nifty ended the day’s trade near intraday high. Though, market traded in the red for most part of the session but, recovery in late trade led by banks and index heavyweight Reliance Industries sent the index at higher level. However, global cues remained unsupportive as most Asian shares closed with red mark on Tuesday amid worries over weakening regional and global economic activity. While, European shares fell on Tuesday as investors turned cautious in the run-up to a European Central Bank (ECB) meeting. Back home, the sentiment got some support as investors started hoping that the government may kick-start the reform process in the face of a sharp slowdown in the Indian economy.

Initially, the Indian benchmark made a soft opening tracking weakness in other Asian counters. The ongoing spat between the Government and the BJP over the controversial coal block allocations continued to dampen the sentiment. The benchmark traded in the red on fears of a possible downgrade of India’s sovereign debt rating if the expected reforms do not come through in the next few days. The market continued to trade in the negative trajectory as sentiments got nervous after P Chidambaram’s Vijay Kelkar Panel submitted fiscal report, which underscored that in worst case scenario without any action on subsidies fiscal deficit could balloon up to 6.1 percent of GDP in the current year. But, in the final hour of trade, market staged strong-willed recovery, which helped Nifty to regain its crucial 5,250 mark, supported by PSU oil marketing companies, which gained strength as petroleum ministry plans to raise diesel rates by Rs 4-5 per litre after the parliament session ends on September 7, 2012 as oil firms’ revenue loss has soared to almost half the retail price. The companies like BPCL, HPCL and IOC all surged between 0.50-2.50 percent. The sentiments also got some support from media shares like Zee Entertainment Enterprises, Dish TV India, Wire & Wireless India, NDTV, TV Today Network and Sun TV Network surged on renewed buying ahead of the October 31, 2012 deadline for cable TV digitization in four metro cities of Delhi, Mumbai, Kolkata and Chennai. Finally, Nifty ended the session near intraday high comfortably over its crucial 5,250 mark.

Meanwhile, all the sectoral indices on the NSE were settled in the green, CNX Media remained the major gainer, up 3.40% followed by CNX Realty up 1.69% and CNX PSU Bank up by 1.17% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 3.99% and reached 16.59.

The India VIX witnessed contraction of 3.99% at 16.59 as compared to its previous close of at 17.28 on Tuesday.The 50-share S&P CNX Nifty gained 20.25 points or 0.39% to settle at 5,274.00.

Nifty September 2012 futures closed at 5299.40 on Tuesday at a premium of 25.40 points over spot closing of 5,274.00, while Nifty October 2012 futures were at 5327.65 at a premium of 53.65 points over spot closing. Nifty September futures saw contraction of 0.81 million (mn) units taking the total outstanding open interest (OI) to 18.92 mn units. The near month September 2012 derivatives contract will expire on Thursday i.e. September 27, 2012.

From the most active contracts, Tata Motors September 2012 futures were at a discount of 0.05 points at 235.35 compared with spot closing of 235.40. The number of contracts traded was 8,748.

Tata Steel September 2012 futures were trading at a premium of 1.65 points at 365.10 compared with spot closing of 363.45. The number of contracts traded was 11,854.

United Spirits September 2012 futures were at a premium of 1.15 point at 1013.65 compared with spot closing of 1012.50. The number of contracts traded was 11,899.

JSW Steel September 2012 futures were at a premium of 5.40 points at 681.15 compared with spot closing of 675.75. The number of contracts traded was 13,170.

ICICI Bank September 2012 futures were at a premium of 3.50 point at 918.25 compared with spot closing of 914.75. The number of contracts traded was 14,595. 

Among Nifty calls, 5300 SP from the September month expiry was the most active call with an addition of 0.22 million open interest.

Among Nifty puts, 5200 SP from the September month expiry was the most active put with an addition of 0.28 million open interest.

The maximum OI outstanding for Calls was at 5300 SP (4.16 mn) and that for Puts was at 5200 SP (6.59 mn).

The respective Support and Resistance levels are: Resistance 5290.5 -- Pivot Point 5261.85 --Support 5245.35.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.03 for September-month contract.

The top five scrips with highest PCR on OI were Welcorp 40.00, ON Mobile 2.94, ABB 2.00, NCC 1.25, and Grasim 1.21.

Among the most active underlying, IFCI witnessed an addition of 1.04 million of Open Interest in the September month futures contract followed by Jaiprakash Associates which witnessed contraction of 0.72 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 0.13 million in the September month futures. Also, Hindalco witnessed an addition of 0.58 million in Open Interest in the September month contract. Finally, HDIL witnessed an addition of 0.03 million of Open Interest in the near month futures contract.