Nifty makes smart pull back on the back of short covering in blue-chip stocks

After two session’s fall, the local benchmark -- Nifty -- witnessed a smart pull back and snapped the day’s trade higher by over a percent, near its crucial 4,900 mark on the back of short-covering in fundamentally strong stocks. Though, global cues continued to remain unsupportive as the US markets extended their plunge on Friday while, all the Asian counterparts barring Hong Kong, snapped the day’s trade in the red on Monday. Earlier, the market made a flat start and traded in the tight range till late morning as investors remained cautious ahead of the F&O series expiry on Thursday. Afterwards, market started falling as European counterparts opened on a subdued note and the local index touched its intraday low near the crucial 4,800 mark. But, the domestic index got strong support there and started gaining strength as European counterparts reversed all their initial losses and traded with good gains. Meanwhile, the bourses got a lift from rally in oil upstream and downstream company shares while, the airline companies too flew higher after international crude oil prices came under severe pressure on reports that the six month long civil upheaval in OPEC member Libya appeared to be coming to an end as the momentum against the Gaddafi regime reached a tipping point. Moreover, sugar stocks too improved the sentiments as stocks like, Balrampur Chini , Shree Renuka Sugar, Dhampur Sugar Mills and Rana Sugar rallied by 4-10 percent in the trade on reports the government has notified export of additional five lakh tonnes of sugar. The benchmark breached its crucial 4,850 level in midmorning trade as sentiments got support after Prime Minister Manmohan Singh declared that the Planning Commission has proposed to set the Twelfth Five Year Plan target at 9 percent GDP growth. He further affirmed that the commission has pointed out that given the uncertainties in the global economy, and the challenges in the domestic economy even a 9 percent target is feasible only if some difficult decisions are taken by the government. Finally, Nifty ended the day’s trade near its intraday high with a gain of over 50 points.

On the global front, the US markets continued their plunge and the indices snapped the fourth consecutive week of losses, investors remained cautious and avoided risky bet while, Global recession fears dragged Asian stocks lower on Monday. However, most of the European counterparts were trading in the positive terrain where CAC and FTSE were trading with a gain of over one and half a percent at this point of time. Back home, broad based buying supported most of the sectoral indices on the NSE to settle in the positive territory with CNX Energy surging the most and ending with a gain of over two percent followed by CNX Infra up 1.85% and CNX PSE up 1.46% in the trade while, CNX IT remained the lone loser on the index down by 0.51%. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 7.22% and reached 27.08, while S&P Nifty moved higher by 53.15 points or 1.10% to close at 4,898.80.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, lost 2.11% and reached 27.08, while S&P Nifty gaining 53.15 points or 1.10% settled at 4,898.80.

Nifty August 2011 futures closed at 4,914.00, at a premium of 15.20 points over spot closing of 4,898.80, while Nifty September 2011 futures were at 4,919.05 at a premium of 20.25 points over spot closing. The near month August 2011 derivatives contract expires on Thursday, August 25, 2011. Nifty August futures saw addition of 11.53% or 2.55 million (mn) units, taking the total outstanding open interest (OI) to 24.74 mn units.

From the most active contract by contract value, SBI’s August 2011 futures closed at a premium of 0.15 point at 2067.00 compared with spot closing of 2066.85. The number of contracts traded was 36,172.

L&T August 2011 futures were at a premium of 2.10 point at 1576.00 compared with spot closing of 1573.90. The number of contracts traded was 15,416.

Tata Motors August 2011 futures were at a premium of 2.35 point at 742.05 compared with spot closing of 739.70. The number of contracts traded was 30,012.

ICICI Bank August 2011 futures were at a premium of 1.20 point at 854.00 compared with spot closing of 852.80. The number of contracts traded was 24,125.

RIL August 2011 futures were at a discount of 0.45 point at 759.40 compared with spot closing of 759.85. The number of contracts traded was 27,029.

Among Nifty calls, 4900 SP from the August month expiry was the most active call with decline of 1.08 million or 25.06%.

Among Nifty puts, 4800 SP from the August month expiry was the most active put with an addition of 0.48 million or 9.74%.

The maximum Call OI outstanding for Calls was at 4900 SP (3.24 mn) and that for Puts was at 5000 SP (5.47 mn).

The respective Support and Resistance levels are: Resistance 4936.31-- Pivot Point 4872.53-- Support 4835.01.

The Nifty Put Call Ratio (PCR) OI wise stood at 0.81 for August-month contract.

The top five scrips with highest PCR on OI were Koak Bank 0.82, Alstom Projects India 0.72, Hindustan Unilever 0.68 Siemens 0.61 and Jubilant FoodWorks 0.61.

Among most active underlying, SBI witnessed a decline of 3.83% of Open Interest (OI) in the August month futures contract followed by Reliance witnessed an expansion of 5.73% of Open Interest (OI) in the near month contract. Meanwhile Tata Motors and JSW Steel witnessed an addition of 8.54%  and 0.66% of OI in the August month futures respectively. Lastly, ICICI Bank witnessed an addition of 6.14% of Open Interest (OI) in the August month contract.