Nifty conquers 5,400 mark on German court verdict

Shrugging off disappointing industrial production numbers, the domestic index S&P CNX Nifty rose for sixth straight day surpassing its crucial 5,400 mark amid reports that Germany’s top court has backed a new EU bailout fund. The global cues remained jubilant as most of the Asian counters ended the day’s trade in the positive terrain ahead of the US Federal Reserve’s policy meeting later today. While, European markets too traded with traction in early trade after Germany’s top court backed the legality of the euro zone bailout funds, although with conditions. Back home, investors would be awaiting the release of August month’s inflation data, for further cues on RBI’s stance in its upcoming monetary policy review.

Initially, benchmark kick started the session in the green terrain tracking supportive global cues. Metal space too provided the Nifty a much needed support as stocks like Jindal Steel, Tata Steel, Sterlite and Hindalco recovered on short covering and value buying at lower levels after recent losses. But, market pared some of its gains in mid noon trade on the back of disappointing July industrial output data. India’s index of industrial production (IIP), a key measure of industrial output registered a negligible growth of 0.1 per cent in July 2012 at 167.3, way lower than growth rate of 3.7 percent in the corresponding period last year and also below the consensus estimates of 0.51 percent. Afterwards, the index regained its strength in the late trade after German court allowed ratification of ESM under certain conditions and rejected complaint against ECB bond buys. The court further said the country must ensure German liability does not exceed 190 billion euros. The local market extended its gains and ended near intraday high as sentiments remained jubilant on hopes for fiscal reforms after the aviation minister expressed hopes that the government would allow foreign direct investment into the sector. Moreover, sentiments were also bolstered after interest rate sensitive realty and auto stocks rose as almost flat growth of industrial output in July 2012 strengthened the case for the central bank to mull cutting policy rates in RBI’s policy review on September 17, 2012 in order to help revive growth.

Meanwhile, most of the sectoral indices on the NSE were settled in the green, CNX Metal remained the major gainer, up 1.97% followed by CNX Auto up 1.47% and CNX Realty up by 1.17% while CNX Pharma declined 0.21% remained the lone loser in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 2.21% and reached 15.04.

The India VIX witnessed contraction of 2.21% at 15.04 as compared to its previous close of at 15.38 on Tuesday. The 50-share S&P CNX Nifty gained 41.00 points or 0.76% to settle at 5,431.00.

Nifty September 2012 futures closed at 5446.95 on Wednesday at a premium of 15.95 points over spot closing of 5,431.00, while Nifty October 2012 futures were at 5472.35 at a premium of 41.35 points over spot closing. Nifty September futures saw an addition of 0.55 million (mn) units taking the total outstanding open interest (OI) to 18.43 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 trading at a premium of 1.10 at 263.60 compared with spot closing of 262.50. The number of contracts traded was 25,654.

BHEL September 2012 futures were trading at a premium of 1.20 points at 198.45 compared with spot closing of 197.25. The number of contracts traded was 11,563.

Tata Steel September 2012 futures were at a premium of 1.00 point at 388.90 compared with spot closing of 387.90. The number of contracts traded was 18,386.

Sesa Goa September 2012 futures were at a premium of 0.60 points at 163.45 compared with spot closing of 162.85. The number of contracts traded was 8,174.

ICICI Bank September 2012 futures were at a premium of 4.05 point at 953.35 compared with spot closing of 949.30. The number of contracts traded was 17,660.

Among Nifty calls, 5600 SP from the September month expiry was the most active call with an addition of 0.64 million open interest.

Among Nifty puts, 5200 SP from the September month expiry was the most active put with an addition of 0.98 million open interest.

The maximum OI outstanding for Calls was at 5600 SP (8.34 mn) and that for Puts was at 5200 SP (9.51 mn).

The respective Support and Resistance levels are: Resistance 5446.38 -- Pivot Point 5420.16 --Support 5404.78.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.26 for September-month contract.

The top five scrips with highest PCR on OI were Abirlanuvo 5.00, Federal Bank 3.00, Bharat Forg 2.25, TCS 1.61, and Tata Motors 1.27.

Among the most active underlying, IFCI witnessed an addition of 0.47 million of Open Interest in the September month futures contract followed by RCOM which witnessed contraction of 0.47 million of Open Interest in the near month contract. Meanwhile, JP Associates witnessed contraction of 0.52 million in the September month futures. Also, Hindalco witnessed an addition of 1.19 million in Open Interest in the September month contract. Finally, Renuka witnessed an addition of 0.54 million of Open Interest in the near month futures contract.