Bulls take full control over market; Nifty up over 2%

Prolonging its previous session’s rally, market witnessed a mindboggling day of trade on Thursday with a triple digit rally as world’s six major central banks moved to tame a liquidity crunch. The US Federal Reserve, and the central banks of the UK, the euro zone, Canada, Japan and Switzerland announced that they had agreed to reduce the cost of offering dollar financing through swap arrangements. Moreover, Chinese shares outperformed, with the Hang Seng Index surging close to 6 percent after Beijing cut the reserve requirement ratio for commercial lenders on Wednesday for the first time in three years, indicating a policy shift as global weakness weighs on China’s economy. On the domestic front, interest rate sensitive banking, realty and auto stocks gained, triggered by hopes that slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases this month. However, the index came off from its day’s high as European markets turned choppy after a positive opening.

Earlier in the trade, domestic market gave thumbs up to the worlds’ top six central banks’ move to pump liquidity into the financial system with an amazing start of over three percent recapturing its crucial 5,000 mark in initial trade. Central banks agreed to make cheaper dollar loans for struggling European banks to prevent the Euro-zone debt woes from turning into a full-blown credit crisis while, all the Asian markets were ebulliently rallied with decent gains. Afterwards, the index cooled off a bit losing its psychological 5,000 mark as market participants booked some of their profits but, investors continued to build positions in rate sensitive counters. The encouraging weekly inflation numbers too underpinned buying interests in the rate sensitive pockets like Banking, Real Estate and Automobile. The inflation data showed that food inflation eased for the fourth straight week in the week ended November 19 and rose by 8%, its slowest pace in nearly four months. However, in the mid noon trade, market lost its crucial 4,950 level following the choppy trade in European counters. Meanwhile, PSU oil marketing companies viz. BPCL, HPCL and IOC edged lower in the trade after state-run oil companies cut petrol prices by Rs 0.78 a litre from midnight on November 30, 2011, the second cut in two weeks. Finally, Nifty snapped the terrific day of trade with a gain of over 100 points.

On the global front, the US markets surged on Wednesday, with the Dow industrials chalking up their best day in more than two and half years, as the Federal Reserve and five other central banks moved to help banks hit by Europe’s debt crisis while, stocks of Asian region rallied to two-week highs on Thursday. Moreover, China announced a 50-basis-point RRR cut after the market closed on Wednesday, which will take effect on December 5, a policy shift to ease credit strains and shore up an economy running at its weakest pace since 2009. However, most of the European counterparts were trading in the negative terrain at this point of time. Back home, most of the sectoral indices on the NSE were settled in the green, CNX Metal remained the major gainer, up 4.01% followed by Bank Nifty up 3.87% and CNX Realty up by 3.78% while CNX Pharma declined 0.53% remained the lone loser. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, declined 5.76% and reached 25.02.

The India VIX witnessed a contraction of 5.76% at 25.02 as compared to its previous close of at 26.55 on Wednesday

The 50-share S&P CNX Nifty gained 104.80 or 2.17% to settle at 4,936.85.

Nifty December 2011 futures closed at 4,957.15 at a premium of 20.30 points over spot closing of 4,936.85, while Nifty January 2011 futures were at 4,977.95 at a premium of 41.10 points over spot closing. The near month December 2011 derivatives contract expires on Thursday, December 29, 2011. Nifty December futures saw addition of 9.72% or 2.11 million (mn) units taking the total outstanding open interest (OI) to 23.85 mn units.

From the most active contract by contract value, ICICI Bank December 2011 futures were at a premium of 3.55 point at 765.55 compared with spot closing of 762.00. The number of contracts traded was 42,465.

SBI’s December 2011 futures were at a discount of 7.35 point at 1813.65 compared with spot closing of 1821.00. The number of contracts traded was 30,580.

L&T December 2011 futures were at a premium of 8.50 at 1297.50 compared with spot closing of 1289.00. The number of contracts traded was 15,891.

Bharti Airtel December 2011 futures were at a premium of 3.10 points at 380.55 compared with spot closing of 377.45. The number of contracts traded was 12,994.

RIL December 2011 futures were at a premium of 5.80 point at 804.55 compared with spot closing of 798.75. The number of contracts traded was 22,867.

Among Nifty calls, 5000 SP from the December month expiry was the most active call with addition of 0.53 million or 9.50%.

Among Nifty puts, 4900 SP from the December month expiry was the most active put with an addition of 1.48 million or 64.35%.

The maximum Call OI outstanding for Calls was at 5000 SP (6.12 mn) and that for Puts was at 4900 SP (3.78 mn).

The respective Support and Resistance levels are: Resistance 4993.60 -- Pivot Point 4955.15 -- Support 4898.40.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.32 for December -month contract.

The top five scrips with highest PCR on OI were Patni 13.00, Voltas 6.00, Mphasis 5.00, Cipla 2.27 and Dr. Reddy 2.24.

Among most active underlying, ICICI Bank witnessed an addition of 0.53% of Open Interest in the December month futures contract followed by SBI which witnessed an addition of 0.99% of Open Interest in the near month contract. Meanwhile RIL witnessed an addition of 10.05% in the December month futures. Also, Tata Steel witnessed an addition of 7.65% in Open Interest in the December month contract. Finally, Tata Motors witnessed an addition of 7.56% of Open Interest in the near month futures contract.