Short covering helps Nifty to snap its three-day losing streak

The domestic index S&P CNX Nifty snapped three-day losing streak and ended the day’s trade with gain of about 20 points as investors bought stocks at lower levels. Software and FMCG led the upmove while rate sensitive like realty, auto and banks remained under pressure on rate hike concerns. Earlier, the benchmark made a positive start on the back of bargain hunting by institutional investors after a three-day slide. But, pared all its initial gains after an hour of trade as investors remained worried over slower global economic growth, while rate sensitive dragged the local index in the red as realty, auto and banking got clobbered during the trade after the Chief Economic Adviser to the finance ministry Kaushik Basu said that India’s headline inflation in August is expected to be near 10 percent, which will prompt RBI to go for another rate hike.Later, market regained strength and started its northward journey as buying interest was witnessed in IT and FMCG stocks. The domestic index breached its crucial 5,100 mark in the mid morning trade. But, at that level market faced strong resistance and suffered profit booking in afternoon trades with the Nifty erasing all the early gains as sentiments got beaten after a subdued start in European markets amid concerns about the region's sovereign debt crisis while, gloomy global leads continued to torment domestic sentiments and market dipped into the red breaching its crucial 5,050 mark. But in the late trade, market recouped its strength and got back to its psychological 5,050 level as IT index witnessed up move of about two percent on bargain hunting after last week’s slide following the S&P downgrade of US. TCS jumped 3 percent, Infosys surged 2.3 percent and Wipro gained 1 percent in trade. Meanwhile, the Competition Commission of India (CCI) said the Centre as well as state governments should come out with regulatory framework for the realty sector to protect consumers from unfair trade practices. Finally Nifty managed to snap the trade with a moderate gain of 0.40 percentage point.

On the global front, the US market declined overnight snapping three sessions of gains as Germany and France rejected the notion of selling common European bonds and suggested a financial-transaction tax, while the Asian equity indices finished the day’s trade mixed on Wednesday as investors remained worried over slower global economic growth. Moreover, most of the European counterparts were trading in the red at this point of time. Back home, on the sectoral front on NSE, CNX Realty remained the major loser, down 3.24% followed by CNX PSU Bank down by 1.28 and Bank Nifty down by 1.03% while, CNX IT and CNX FMCG rose 1.86% and 1.39% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 3.70% and reached 25.48, while S&P Nifty closed at 5,056.60 gaining 20.80 points or 0.41%.

The India VIX witnessed loss of 3.70% at 25.48 on Wednesday as compared to its previous close of 26.46 on Tuesday.  

The 50-share S&P CNX Nifty gain 20.80 points or 0.41% and settled at 5,056.60.

Nifty August 2011 futures closed at 5,069.70, at a premium of 13.10 point over spot closing of 5,056.60, while Nifty September 2011 futures were at 5,081.20 at a premium of 24.60 points over spot closing. The near month August 2011 derivatives contract expires on Thursday, August 25, 2011. Nifty August futures saw addition of 4.59% or 1.08 million (mn) units, taking the total outstanding open interest (OI) to 24.62 mn units.

From the most active contract by contract value, SBI’s August 2011 futures closed at a premium of 6.00 point at 2181.00 compared with spot closing of 2175.00. The number of contracts traded was 32,515.

ICICI Bank August 2011 futures were at a premium of 3.00 point at 915.50 compared with spot closing of 912.50. The number of contracts traded was 26,983.

DLF August 2011 futures were at a premium of 0.10 point at 177.10 compared with spot closing of 177.00. The number of contracts traded was 24,148.

Tata Steel August 2011 futures were at a premium of 0.80 point at 472.40 compared with spot closing of 471.60. The number of contracts traded was 17,236.

RIL August 2011 futures were at a premium of 2.70 point at 757.00 compared with spot closing of 754.30. The number of contracts traded was 20,963.  Among Nifty calls, 5100 SP from the August month expiry was the most active call with contradiction of 0.003 million or 0.08%.

Among Nifty puts, 5000 SP from the August month expiry was the most active put with addition of 0.049 million or 0.67%.

The maximum Call OI outstanding for Calls was at 5100 SP (4.38 mn) and that for Puts was at 5000 SP (7.38 mn).

The respective Support and Resistance levels are: Resistance 5106.75 -- Pivot Point 5062.00 -- Support 5011.85.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.98 for August -month contract.

The top five scrips with highest PCR on OI were BRFL 8.50, Bombay Dyeing 8.33, ZEEL 4.40, Hotel Leela 1.50 and Sun Pharma 1.31.

Among most active underlying, SBI witnessed an addition of 6.20% of Open Interest (OI) in the August month futures contract followed by DLF witnessed a contradiction of 2.15% of Open Interest (OI) in the near month contract. Meanwhile ICICI Bank witnessed an addition of 14.78% of OI in the August month futures. Also, Reliance Industries witnessed an addition of 2.05% of Open Interest (OI) in the August month contract.