Street cheers RBI Policy; Nifty closes above 6200 mark

Nifty shot up above 6200 level as investors cheered the RBI decision to increase a key policy rate to tame inflation and at the same time enhance liquidity for banks. Nifty edged lower in earlier trades as investors remained on sidelines ahead of Reserve Bank of India’s (RBI’s) monetary policy announcement later in the day. The street expected RBI to raise its repo rate by 25 basis points (bps) and cut marginal standing facility (MSF) by 25 bps. Global cues too remained sluggish with the US markets closing modestly lower overnight as traders seemed reluctant to make any significant moves following the strong gains in last few weeks, ahead of the Federal Reserve's Wednesday announcement on monetary policy. All the Asian equity benchmarks were trading in the negative terrain in early deals on Tuesday as investors remained on sidelines awaiting the outcome of the US Federal Reserve’s policy meeting this week. Volatility ruled the roost as index reversed intraday losses in late morning  after the Reserve Bank of India (RBI) in its second quarterly monetary policy review 2013-14, increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.5% to 7.75% with immediate effect. Further, the central bank reduced the Marginal Statutory Funding Rate by 25 bps to 8.75% with immediate effect. However, Cash Reserve Ratio (CRR) was left unchanged at 4%.

In the afternoon trade, index extended gains to move above the 6200 level and hit fresh intraday highs mainly on buying witnessed in Stocks of public sector oil marketing companies (OMCs) viz. BPCL, HPCL and IOC that edged higher as the Kirit S. Parikh Committee’s report on pricing diesel, domestic LPG, and PDS kerosene suggested an immediate increase in diesel prices by at least Rs 4 a litre and, thereafter, doubling the current pace of increase in diesel prices to Re1 per month. Apart from this, there will be lot of result reactions to keep the markets ticking. In last leg of trade, index closed while consolidating a little above 6200 level.

NSE sectoral indices made a red closing. CNX Bank up by 4.35%, CNX PSU Bank up by 3.87% , CNX Finance up by 3.74% , CNX Realty up by 2.71% and CNX MNC up by 2.65% .On the other hand,  there were no losers on index.

The India VIX decreased by 7.18% at 19.76 as compared to its previous close of 21.29 on Monday. The 50-share CNX Nifty inclined by 119.80 points or 1.96% to settle at 6,220.90.

Nifty October 2013 futures closed at 6228.95 on Tuesday at a premium of 8.05 points over spot closing of 6220.90, while Nifty November 2013 futures ended at 6278.15 at a premium of 57.25 points over spot closing. Nifty October futures saw contraction of 1.30 million (mn) units taking the total outstanding open interest (OI) to 12.82 mn units. The near month October 2013 derivatives contract will expire on October 31, 2013.

From the most active contracts, Tata Steel October 2013 futures last traded at a discount of 0.50 points at 326.50 compared with spot closing of 327.00. The number of contracts traded was 20,135.

Yes Bank October 2013 futures were at a discount of 1.15 points at 371.85 compared with spot closing of 373.00. The number of contracts traded was 42,337. 

DLF October 2013 futures were at a discount of 0.35 points at 150.50 compared with spot closing of 150.85. The number of contracts traded was 26,523. 

ICICI Bank October 2013 futures were at a discount of 4.40 points at 1074.10 compared with spot closing of 1078.50. The number of contracts traded was 44,975. 

HDFC Bank October 2013 futures last traded at a premium of 0.45 points at 687.45 compared with spot closing of 687.00. The number of contracts traded was 19,520.Among Nifty calls, 6,300 SP from the October month expiry was the most active call with an addition of 0.44 million open interest.

Among Nifty puts, 6,100 SP from the October month expiry was the most active put with an addition of 1.88 million open interest.

The maximum OI outstanding for Calls was at 6,300 SP (6.87 mn) and that for Puts was at 6,100 SP (6.31 mn).

The respective Support and Resistance levels of Nifty are: Resistance 6272.9-- Pivot Point 6176.05-- Support --6124.05.

Among most active underlying, SBI witnessed contraction of 1.14 million of Open Interest in the October month futures contract followed by Infosys with contraction of 0.22 million of Open Interest in the near month contract; Reliance Industries witnessed contraction of 0.87 million of Open Interest in the October month futures. United Spirits witnessed contraction of 1.30 million in Open Interest in the October month contract and ICICI Bank witnessed contraction of 0.33 million in Open Interest in the near month futures contract.