Nifty suffers moderate cut after massive rally last week

After witnessing jubilant 1,151 points rally last week, the domestic index S&P CNX Nifty ended a choppy session in the negative territory with a marginal loss of about 10 points on Monday due to lack of buying conviction amongst investors at higher levels. However, the index pared most of its losses in final hour of trade following firm European markets as Italy took steps to resolve its debt problems before European Union leaders meet this week to tackle the region’s crisis.

Initially, Indian equity market made a flat-to-negative opening tracking mixed global cues. Afterwards market turned choppy as sentiments remained dampened as global ratings agency Moody’s said that tough times are ahead for the Indian economy and it may revise downwards the country’s growth forecast for 2011-12 to 6.5%. Market touched its intraday low in late morning trade near its crucial 5,000 mark, led by fall in metal stocks due to weak economic data in China. Meanwhile, Finance Minister Pranab Mukherjee told opposition leaders that the decision on allowing FDI in retail was being put on hold and a final decision will be taken only after consulting all opposition parties. Retail stocks edged lower with Pantaloon Retail slumped 13% to Rs 186. Vishal Retail, Store One and Provogues slipped 3-7 percent. But, market rebounded from its intraday low as sentiment supported by Airline stocks, which gained on reports that government may allow foreign carriers to buy 26% stake in domestic airlines. A bout of volatility witnessed in final hour of trade and Nifty lost quick 35 points but, firm opening in European counters helped market to pare most of its losses and finally, Nifty snapped the sluggish day of trade with a marginal cut of about 0.20 percentage point.

On the global front, the US markets, though made a flat closing on Friday but it was the best week for the major indices since March 2009 while, most of the Asian equity indices snapped the day’s trade on higher note on Monday as investors hoped for progress in what could be a crucial week for curbing Europe’s debt crisis. Moreover, all the European counterparts were trading in the positive terrain where major indices CAC, DAX and FTSE all were trading with a gain of 0.50-1.5 percent at this point of time. Back home, most of the sectoral indices on the NSE were settled in the green, CNX PSU Bank remained the major gainer, up 1.08% followed by CNX Media up 0.58% and CNX Infra up by 0.50% while CNX Metal and CNX Pharma declined 0.99% and 0.54% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 4.29% and reached 25.02.

The India VIX witnessed an addition of 4.29% at 25.02 as compared to its previous close of at 23.99 on Friday.

The 50-share S&P CNX Nifty lost 11.00 points or 0.22% to settle at 5,039.15 .

Nifty December 2011 futures closed at 5,072.25 at a premium of 33.10 points over spot closing of 5,039.15, while Nifty January 2011 futures were at 5,092.45 at a premium of 53.30 points over spot closing. The near month December 2011 derivatives contract expires on Thursday, December 29, 2011. Nifty December futures saw addition of 6.02% or 1.32 million (mn) units taking the total outstanding open interest (OI) to 23.31 mn units.

From the most active contract by contract value, SBI’s December 2011 futures were at a discount of 14.00 point at 1902.00 compared with spot closing of 1916.00. The number of contracts traded was 30,893.

ICICI Bank December 2011 futures were at a premium of 5.90 point at 788.80 compared with spot closing of 782.90. The number of contracts traded was 19,288.

Axis Bank December 2011 futures were at a premium of 0.15 at 1031.45 compared with spot closing of 1031.30. The number of contracts traded was 14,183.

L&T December 2011 futures were at a premium of 9.90 points at 1325.40 compared with spot closing of 1315.50. The number of contracts traded was 8,546.

Tata Motors December 2011 futures were at a discount of 0.35 point at 191.00 compared with spot closing of 191.35. The number of contracts traded was 11,242.

Among Nifty calls, 5100 SP from the December month expiry was the most active call with a addition of 0.64 million or 11.59%.

Among Nifty puts, 5000 SP from the December month expiry was the most active put with an addition of 0.03 million or 0.59%.

The maximum Call OI outstanding for Calls was at 5100 SP (6.11 mn) and that for Puts was at 5000 SP (4.95 mn).

The respective Support and Resistance levels are: Resistance 5062.18-- Pivot Point 5032.36-- Support 5009.33.

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 16.70, Voltas 6.00, Mphasis 3.00, Cipla 2.44 and Dr. Reddy 1.82.

Among most active underlying, SBI witnessed an addition of 2.52% of Open Interest in the December month futures contract followed by ICICI Bank which witnessed an addition of 4.59% of Open Interest in the near month contract. Meanwhile Indiabulls Real Estate witnessed a contraction of 3.20% in the December month futures. Also, Tata Steel witnessed an addition of 3.66% in Open Interest in the December month contract. Finally, RIL witnessed an addition of 2.13% of Open Interest in the near month futures contract.