Bulls continue to show aggression; Nifty reclaims 5,050 mark

Sentiment remained bullish for third consecutive day with Nifty again witnessing triple digit rally recapturing 5,050 mark following decent up-move in European counterparts. European markets were strong, which rallied nearly 2%, ahead of conclusion from the EU summit later on Friday. German Chancellor Angela Merkel said strengthening EMU would be central theme at European Union summit. Back Home, market traded near its neutral lines during first half but, took a sudden bounce in second half tracing firm European peers. Metal and bank shares, which led the rally yesterday, continued their up-move further gaining 2.5-3.5 percent. Moreover, the Indian rupee too appreciated by 19 paise to 51.27 a dollar.

After a flat opening, the market edged lower in early trade as investors opted to book profits amid weak Asian markets. Afterwards, the local index hovered between the positive and negative terrain in morning trade due to lack of major trigger. Moreover, index heavyweight Reliance Industry (RIL) edged lower in the early trade too dampened the sentiment. Market traded near its crucial 4,950 mark during the first half of trade. But, the second half turned out as a reward for the market as intense buying witnessed in mostly all the heavyweights aimed firm European counterparts, which propelled the Nifty over its crucial 5,000 level in mid noon trade. Meanwhile, interest rate sensitive banking stocks extended recent gains triggered by hopes that slowing economy could prompt the Reserve Bank of India (RBI) to pause on rate increases this month while, IT stocks rose on positive economic data in US and after major central banks on Wednesday moved to tame a liquidity crunch for European banks by providing cheaper dollar funding. Moreover, renewed buying by foreign funds in last two days supported up-move and the index recaptured its psychological 5,050 mark. Foreign institutional investors (FIIs) bought shares worth Rs 687.26 crore on December 1, 2011, as per the provisional data from the stock exchanges. Finally, Nifty snapped the day’s trade near its intraday high garnering gain of over two percent.

On the global front, the US markets made a mixed closing overnight while, most of the Asian equity indices witnessed consolidation on Friday ahead of the US nonfarm payrolls report later in the global day. Moreover, European counterparts were trading in jubilant mood where CAC, DAX and FTSE were up by over one and a half percent at this point of time. Back home, all the sectoral indices on the NSE settled in the positive territory with Bank Nifty gaining the most, up 3.12% followed by CNX Services up by 2.74%, CNX Metal up by 2.67% and CNX PSU Bank up by 2.66% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, tumbled 4.11% and reached 23.99.

The India VIX witnessed a contraction of 1.03% at 23.99 as compared to its previous close of at 25.02 on Thursday.

The 50-share S&P CNX Nifty accumulated gains of 113.30 or 2.29% to settle at 5,050.15.

Nifty December 2011 futures closed at 5,093.80 at a premium of 43.65 points over spot closing of 5,050.15, while Nifty January 2011 futures were at 5,113.00 at a premium of 62.85 points over spot closing. The near month December 2011 derivatives contract expires on Thursday, December 29, 2011. Nifty December futures saw addition of 12.02% or 2.61 million (mn) units taking the total outstanding open interest (OI) to 24.35 mn units.

From the most active contract by contract value, SBI's December 2011 futures were at a discount of 15.00 point at 1884.00 compared with spot closing of 1899.00. The number of contracts traded was 36,414.

ICICI Bank December 2011 futures were at a premium of 3.30 point at 792.70 compared with spot closing of 789.40. The number of contracts traded was 33,421.

Tata Motors December 2011 futures were at a discount of 0.50 at 191.30 compared with spot closing of 191.80. The number of contracts traded was 17,804.

Tata Steel December 2011 futures were at a premium of 0.35 points at 419.45 compared with spot closing of 419.10. The number of contracts traded was 20,082.

Bharti Airtel December 2011 futures were at a premium of 1.45 point at 395.30 compared with spot closing of 393.85. The number of contracts traded was 10,264.

Among Nifty calls, 5100 SP from the December month expiry was the most active call with a contraction of 0.71million or 11.48%.

Among Nifty puts, 4900 SP from the December month expiry was the most active put with an addition of 1.44 million or 40.99%.

The maximum Call OI outstanding for Calls was at 5100 SP (5.48 mn) and that for Puts was at 4900 SP (4.97 mn).

The respective Support and Resistance levels are: Resistance 5102.33-- Pivot Point 5010.36-- Support 4958.18.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.44 for December -month contract.

The top five scrips with highest PCR on OI were Patni 14.36, Voltas 6.00, Mphasis 3.00, Dr. Reddy 2.33 and Cipla 2.29.

Among most active underlying, SBI witnessed an addition of 7.59% of Open Interest in the December month futures contract followed by ICICI Bank which witnessed an addition of 1.48% of Open Interest in the near month contract. Meanwhile RIL witnessed an addition of 8.06% in the December month futures. Also, Tata Steel witnessed an addition of 2.33% in Open Interest in the December month contract. Finally, Tata Motors witnessed an addition of 8.91% of Open Interest in the near month futures contract.