Nifty re-conquer 5,700 mark on strong Q2 earning from L&T, TCS

Buoyed by strong second quarter earnings from blue-chip companies such as Larsen & Toubro (L&T) and Tata Consultancy Services (TCS), the 50-share NSE Nifty resumed its northward journey, after a day of halt. On the global front, recovery in European markets, after a subdued start, too supported the sentiments on the back of renewed hopes that debt-stricken Spain will soon request a bailout after Prime Minister Mariano Rajoy clinched election victory in his home region of Galicia on Sunday in a result seen as supportive for his austerity drive. Some amount of recovery was also witnessed in Asian region as the equity indices settled mixed, after trading in the red for most part of the day’s trade. 

Back home, the local benchmark opened in the negative terrain following weakness in global market. Afterwards, market started recovering and entered into the green zone, supported by buying in IT and technology stocks on the back of better than expected performance of the IT bellwether TCS helped the markets to gain strength. TCS, on consolidated basis, posted a rise of 49.25 percent in its net profit at Rs 3434.37 crore for the quarter ended September 30, 2012. Market continued its northward journey and regained its crucial 5,700 mark as sentiments further got strengthened after India’s top construction and engineering company, L&T beat estimates with a 42.45 percent rise in net profit for the July-Sept quarter, helped by a one-time gain and higher revenue booking. Appreciation in Indian rupee against dollar too aided the sentiments. Meanwhile, recovery in European counters, after a subdued start, too helped the upward trend. Some amount of support also came in after banking stocks gained on expectations that the Reserve Bank of India (RBI) may cut the cash reserve ratio, or the amount of deposits lenders must keep with the central bank, at its policy review on October 30. However, the gains remain capped as Metal stocks like Sesa Goa, SAIL, Uttam Galva, Sterlite Industries, and Jindal Steel edged lower as LMEX, a gauge of six metals traded on the London Metal Exchange dropped 2.37% October 19, 2012. PSU stocks were in somber mood ahead of an Inter-Ministerial Group meeting to decide on the appointment of merchant bankers to manage the stake sale of Power Grid Corporation. Finally, Nifty ended the session comfortably over its psychological 5,700 mark with a gain of over half a percent.

Meanwhile, most of the sectoral indices on the NSE settled in green, CNX Infra remained the major gainer, up 1.27% followed by Bank Nifty up 1.01%, CNX Pharma up 0.94% and CNX IT up by 0.75% while, CNX Media lost 1.60% and CNX PSU Bank down by 0.69% remained the top losers on the NSE sectoral space. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 10.32% and reached 13.04.

The India VIX witnessed contraction of 10.32% at 13.04 as compared to its previous close of at 14.54 on Friday.

The 50-share S&P CNX Nifty gained 32.90 points or 0.58% to settle at 5,717.15.

Nifty October 2012 futures closed at 5724.75 on Monday at a premium of 7.60 points over spot closing of 5,717.15, while Nifty November 2012 futures were at 5758.80 at a premium of 41.65 points over spot closing. Nifty October futures saw contraction of 2.47 million (mn) units taking the total outstanding open interest (OI) to 19.72 mn units. The near month October 2012 derivatives contract will expire on October 25, 2012.

From the most active contracts, Tata Motors October 2012 futures were trading at a discount of 0.45 at 267.45 compared with spot closing of 267.90. The number of contracts traded was 15,769.

ICICI Bank October 2012 futures were trading at a premium of 0.65 at 1077.25 compared with spot closing of 1076.60. The number of contracts traded was 24,657.

United Spirits October 2012 futures were at a discount of 5.75 point at 1294.25 compared with spot closing of 1300.00. The number of contracts traded was 15,619.

SBI October 2012 futures were at a premium of 6.35 point at 2247.35 compared with spot closing of 2241.00. The number of contracts traded was 35,948.

Axis Bank October 2012 futures were at a premium of 2.45 point at 1222.45 compared with spot closing of 1220.00. The number of contracts traded was 19,804.

Among Nifty calls, 5700 SP from the October month expiry was the most active call with contraction of 0.90 million open interest. 

Among Nifty puts, 5700 SP from the October month expiry was the most active put with an addition of 0.77 million open interest.

The maximum OI outstanding for Calls was at 5700 SP (5.28 mn) and that for Puts was at 5700 SP (6.24 mn).

The respective Support and Resistance levels are: Resistance 5739.78 -- Pivot Point 5698.91 -- Support 5676.28.

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

The top five scrips with highest PCR on OI were Axis Bank 2.33, PNB 1.54, ITC 1.37, HCL Tech 1.26 and Aditya Birla Nuvo 1.25.

Among most active underlying, Suzlon witnessed contraction of 51.00 million of Open Interest in the October month futures contract followed by NHPC which witnessed contraction of 0.33 million of Open Interest in the near month contract. Meanwhile IFCI witnessed contraction of 18.97 million in the October month futures. Also, Unitech witnessed contraction of 15.58 million in Open Interest in the October month contract. Finally, JP Associates witnessed contraction of 6.98 million of Open Interest in the near month futures contract.