Nifty ends higher as November WPI data raised hopes of rate cut

S&P CNX Nifty ended high on Friday as investors sentiment were boosted by the lower-than-expected November inflation, which renewed hopes of a rate cut by the central bank in next monetary policy. On the global front, Asian markets shut shop mostly in the red, with strong Chinese manufacturing figures offset by concern about the US ‘fiscal cliff’ and downbeat Japanese business confidence data. European markets made cautious start as German manufacturing sector slipped to 46.3 in December from 46.8 in the previous month remaining well below the 50 threshold that divides growth from contraction and missed the street expectations.

Back home, market made a quite opening as investors remained on the sidelines in the early deals ahead of November inflation numbers and continued volatile trade in the late morning session in absence of any triggers. In early noon session, market reacted positively to November inflation (WPI) which came in at a lower than expected 7.24% for November 2012 against 7.45% for the previous month and 9.46% during the same month last year. With these favorable numbers investors were hopeful for the Reserve Bank of India’s rate cut in the next monetary policy due next week. Gaining strength brick by brick, benchmark equity indices surged to its intra-day high in the noon session, on the back of rise seen in shares of PSU Banks, metal, commodities and the realty. Indian market pared gains but continued its firm trade in the late afternoon session on account of buying in frontline counters and taking cues from European counterparts. However, in last session market indices surged to highest level of the session in the dying hours of the trade, after Chidambaram stated that current fiscal deficit target of 5.3% is achievable for the current fiscal, key criteria for averting a credit-rating downgrade to junk status. Finally, Nifty ended the session near its intraday high with a gain of half a percent.

Meanwhile, most of the sectoral indices on the NSE settled in green, CNX PSU Banks up by 2.36%, CNX Metal up by 1.89%, CNX Commodities up by 1.05%, CNX Reality up by 0.92% and CNX Finance up by 0.76% remained the top gainers in the trade. While CNX Pharma down 0.53% and CNX Consumption down 0.15% and CNX Infra down 0.03% remained the top loser. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, down 3.23% and reached 14.23.

The India VIX witnessed contraction of 3.26% at 14.23 as compared to its previous close of at 14.71 on Thursday.

The 50-share S&P CNX Nifty gained 28.10 points or 0.48% to settle at 5,879.60.

Nifty December 2012 futures closed at 5914.90 on Friday at a premium of 35.30 points over spot closing of 5,879.60, while Nifty January 2013 futures ended at 5951.20, at a premium of 71.60 points over spot closing. Nifty December futures saw contraction of 0.13 million (mn) units taking the total outstanding open interest (OI) to 21.37 mn units. The near month December 2012 derivatives contract will expire on December 27, 2012.

From the most active contracts, NMDC December 2012 futures were at a premium of 1.15 at 161.40 compared with spot closing of 160.25. The number of contracts traded was 11,152.

Tata Motors December 2012 futures were at a premium of 1.60 at 293.60 compared with spot closing of 292.00. The number of contracts traded was 20,548.

DLF December 2012 futures were at a premium of 1.35 point at 218.95 compared with spot closing of 217.60. The number of contracts traded was 11,025.

Tata Steel December 2012 futures were at a discount of 0.60 point at 399.40 compared with spot closing of 400.00. The number of contracts traded was 12,654.

Reliance Industries December 2012 futures were at a premium of 3.35 point at 843.70 compared with spot closing of 840.35. The number of contracts traded was 10,574.

Among Nifty calls, 6,000 SP from the December month expiry was the most active call with contraction of 0.32 million open interest.

Among Nifty puts, 5,800 SP from the  December month expiry was the most active put with  an addition  of 0.93 million open interest.

The maximum OI outstanding for Calls was at 6000 SP (11.24 mn) and that for Puts was at 5800 SP (9.16 mn).

The respective Support and Resistance levels are: Resistance 5897.42 -- Pivot Point 5868.28 -- Support 5850.47.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.25 for December -month contract.

The top five scrips with highest PCR on OI were Bajaj-Auto 1.87, Bank Baroda 1.53, ACC 1.48, PNB 1.39 and Abirlanuvo 1.25.

Among most active underlying, Unitech witnessed an addition of 0.80 million of Open Interest in the December month futures contract followed by IFCI which witnessed an addition of 1.12 million of Open Interest in the near month contract. Meanwhile, Jaiprakash Associates witnessed contraction of 0.29 million in the December month futures. Also, Reliance Communications witnessed contraction of 0.31 million in Open Interest in the December month contract. Finally, NMDC witnessed an addition of 0.05 million of Open Interest in the near month futures contract.