Final hour profit booking prompts Nifty to close below 5,100 mark

Barometer 50 share index-S&P CNX Nifty - after snapping the previous session on a distressing note, ended the first trading day of the truncated week on a positive note with a gain of about a percent. Although the barometer gauge was riding high since start,but profit booking in afternoon session took the index below its crucial 5,100 mark. Marketmen ahead of major events like RBI credit policy and F&O expiry due on Tuesday, were more optimistic on euro-zone bailout hopes and improved Chinese manufacturing data. Traders expect Reserve Bank of India (RBI) to hike interest rate by 25bps in the quarterly review of credit policy scheduled on October 25. But at the same time they expect to see slight easing of RBI’s hawkish tone. The RBI has already hiked rates 12 times since March, 2010, to control inflation. CNX IT sector lead the race followed by Bank Nifty. Meanwhile, IT stocks were seen in action anticipating resolution in sight for European crisis as the IT companies generate larger chunk of revenue from European market. Meanwhile, Auto stocks gained in anticipation of higher sales during Diwali, the festival of lights. However, the optimism got tempered to some extent in late noon trades after Union Bank announced earnings way below the street’s estimates. Further weakness crept in Capital Goods (CG) sector as L&T headed down by around 3% and BHEL too entered in red zone pulling the Capital Goods index lower.

On the global front, Asian pacific stocks after getting a strong start ended equally well, comforted by a report that showed China’s manufacturing may expand for the first time in four months. The markets ended well for the second straight session underpinned by positive export figures from Japan pointing a recovery from a devastating tsunami earlier this year, which besides fuelling a rally in Japan's Nikkei 225 index also buoyed the sentiment across the region. Japan's Finance Ministry said early on Monday that exports rose 2.4% in September compared with a year earlier, marking the second consecutive month of growth. Moreover, most of the European counterparts were trading in the negative terrain despite a positive start, where major indices like CAC, DAX were trading with a cut of over half a percent at this point of time while FTSE managed to inch higher.

The India VIX witnessed a contraction of 4.11% at 25.22 as compared to its previous close of at 26.30 on Friday.

The 50-share S&P CNX Nifty gained 48.40 points or 0.96% and settled at 5,098.35.

Nifty October 2011 futures closed at 5,105.00 at a premium of 6.65 points over spot closing of 5,098.35, while Nifty November 2011 futures were at 5,126.75 at a premium of 28.40 points over spot closing. The near month October 2011 derivatives contract expires tomorrow, October 25, 2011. Nifty October futures saw addition of 17.74% or 2.35 million (mn) units, taking the total outstanding open interest (OI) to 15.62 mn units.

From the most active contract by contract value, SBI’s October 2011 futures were at a premium of 2.10 point at 1913.10 compared with spot closing of 1911.00. The number of contracts traded was 34,884.

L&T October 2011 futures were at a premium of 4.00 point at 1300.00 compared with spot closing of 1296.00. The number of contracts traded was 18,865.

Axis Bank October 2011 futures were at a discount of 8.00 point at 1157.00 compared with spot closing of 1165.00. The number of contracts traded was 16,755.

L&T November 2011 futures were at a premium of 10.00 point at 1306.00 compared with spot closing of 1296.00. The number of contracts traded was 13,705.

Tata Steel October 2011 futures were at a discount of 0.30 point at 435.50 compared with spot closing of 435.80. The number of contracts traded was 18,918.Among Nifty calls, 5200 SP from the October month expiry was the most active call with a addition of 0.84 million or 9.76%

Among Nifty puts, 5100 SP from the October month expiry was the most active put with a contraction of 0.30 million or 8.33%.

The maximum Call OI outstanding for Calls was at 5200 SP (9.4 mn) and that for Puts was at 5100 SP (3.94 mn).

The respective Support and Resistance levels are: Resistance 5134.41--Pivot Point 5109.58-- Support 5109.58.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.60 for October-month contract.

The top five scrips with highest PCR on OI were Punjab National Bank 2.00, Tata Chemicals 2.00, Infosys 1.85, IDFC 1.50 and Ambuja Cement 1.44.

Among most active underlying, SBI witnessed a contraction of 1.07% of Open Interest (OI) in the October month futures contract followed by L&T witnessed an addition of 4.45% of Open Interest (OI) in the near month contract. Meanwhile Reliance witnessed a contraction of 1.33% of OI in the October month futures. Also, Tata Steel witnessed an addition of 0.97% of Open Interest (OI) in the October month contract followed by ICICI Bank which witnessed an addition of 5.42% of Open Interest (OI) in the October month contract.