New reforms hope fortifies market; Nifty surpasses 5,750 mark

NSE’s benchmark index S&P CNX Nifty exhibited a terrific session, rising to a 15-month peak on Thursday, after the government’s reform proposals for the insurance and pension sectors sparked gains in financial stocks. Global cues too boosted the sentiments as most of the Asian markets ended the trade in the positive terrain on reports that US service companies grew last month at the fastest pace in six months. European counters too traded nicely in the early deals ahead of interest rate decisions from the Bank of England and the European Central Bank, and before key bond auctions in Spain. Moreover, the US markets made a modest bounce back overnight on stronger-than-expected US labor and service-sector data. Back home, appreciation in Indian rupee too boosted the sentiments. Indian rupee remained below 52 against the US dollar, strengthening by 30 paise to 51.85 against the US dollar, which indicates that the foreign institutional investors continued buying into Indian equities.

Initially, market kick started with handsome gains on big ticket reform hopes. Afterwards, the index got strengthened on hopes of more action from government, especially in further lowering its subsidies and tackling bigger measures such as a reform in the goods and services tax, after already announcing big bang reforms last month. Investors were also encouraged after India’s services sector expanded at its fastest pace in seven months as a spurt in new business encouraged firms to hire more staff, according to a HSBC survey on Thursday, suggesting the worst of the economic slump may be over. Market continued its jubilant run and touched its intraday high in mid noon trade surpassing its crucial 5,800 mark following firm opening in European counters. But, profit booking at that level propelled the index to come off the day’s high though, the benchmark held its nerves and continued to trade firm till end as some amount of strength came in from telecom stocks, which rallied after the Empowered Group of Ministers (EGoM) ratified department of telecommunications (DoT) decision on 100% foreign companies’ eligibility, now they can bid on their own without a partner. Financial firms too traded jubilantly after the cabinet was set to approve later in the day, bills that would raise the cap on foreign direct investment in insurance firms and open the pension sector to foreign investors. Finally, Nifty ended the session comfortably over its crucial 5,750 mark with a gain of about a percentage point.

Most of the sectoral indices on the NSE closed in green, CNX Realty was the top gainer up by 5.02%, CNX Media gained 2.65%, Bank Nifty was up by 1.94%, CNX Finance was up by 1.86%, CNX Infra gained 1.62% and CNX PSU Bank gained 1.44%. On the other hand, CNX Pharma down by 0.98% and CNX IT down by 0.36% were the losers. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, decline 0.36% and reached 16.44.

The India VIX witnessed contraction of 0.36% at 16.44 as compared to its previous close of at 16.50 on Wednesday.

The 50-share S&P CNX Nifty gained 56.35 points or 0.98% to settle at 5,787.60.

Nifty October 2012 futures closed at 5825.70 on Thursday at a premium of 38.10 points over spot closing of 5,787.60, while Nifty November 2012 futures were at 5853.40 at a premium of 65.80 points over spot closing. Nifty October futures saw an addition of 0.51 million (mn) units taking the total outstanding open interest (OI) to 25.64 mn units. The near month October 2012 derivatives contract will expire on October 25, 2012.

From the most active contracts, JP Associates October 2012 futures were trading at a discount of 1.55 at 89.20 compared with spot closing of 90.75. The number of contracts traded was 12,540.

Tata Motors October 2012 futures were trading at a premium of 2.05 at 275.40 compared with spot closing of 273.35. The number of contracts traded was 11,470.

HDIL October 2012 futures were at a discount of 0.25 point at 106.60 compared with spot closing of 106.85. The number of contracts traded was 14,664.

DLF October 2012 futures were at a premium of 0.30 point at 242.90 compared with spot closing of 242.60. The number of contracts traded was 18,817.

BHEL October 2012 futures were at a discount of 1.45 point at 266.35 compared with spot closing of 267.80. The number of contracts traded was 19,024.

Among Nifty calls, 6000 SP from the October month expiry was the most active call with an addition of 0.05 million open interest.

Among Nifty puts, 5600 SP from the October month expiry was the most active put with an addition of 0.48 million open interest.

The maximum OI outstanding for Calls was at 6000 SP (6.09 mn) and that for Puts was at 5600 SP (5.58 mn).

The respective Support and Resistance levels are: Resistance 5812.78 -- Pivot Point 5782.06 --Support 5756.88.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.07 for October - month contract.

The top five scrips with highest PCR on OI were ITC 1.61, Union Bank 1.25, Jindal Steel 1.22, Ambuja Cement 1.16, PNB 1.16 and SBI 1.15.

Among the most active underlying, IFCI, witnessed an addition of 1.32 million of Open Interest in the October month futures contract followed by JP Associates, which witnessed an addition of 2.08 million of Open Interest in the near month contract. Meanwhile, RCOM witnessed an addition of 0.46 million in the October month futures. Also, Unitech witnessed an addition of 7.38 million in Open Interest in the October month contract. Finally, GMR Infrastructure witnessed an addition of 4.28 million of Open Interest in the near month futures contract.