Splendid trade ends with marginal gains; govt takes U-turn on FDI in retail

The domestic index S&P CNX Nifty closed the promising day of trade with marginal gains as sentiments turned choppy after the government bowed to intense pressure from within and outside and announced suspension of its decision to allow FDI in retail, bringing Parliament back to business after nine days of logjam. Though, market traded splendidly throughout the day’s trade but, final hour of trade ate gains of about 50 points on the back of profit booking in banking, infra and pharma stocks. Even then, market was able to hold its crucial 5,050 level and snapped the trade with a gain of over 0.40 percent. Global cues remained supportive as European officials are reportedly discussing the possibility of significantly boosting the region’s ability to fight the debt crisis by operating two bailout funds instead of just one. Moreover, Germany and France have agreed on treaty changes to enable a tighter fiscal union among euro area members.

Market started moving northward after a flat opening spurred by a firm trend in Asian markets amid optimism that leaders from the region will be able to chalk out a wide-ranging plan to tackle the long-running credit crisis at a summit scheduled for December 9, 2011. The domestic index gained its crucial 5,050 mark in early trade. Meanwhile, the ailing airline companies edged higher in the trade as finance ministry has approved a draft Cabinet note floated by the commerce and industry ministry allowing foreign fliers to acquire up to 26 percent stake in India’s aviation companies. Stocks of Spicejet, Jet Air India and Kingfisher Airlines rose by 0.50-1.50 percent while, technology shares too rose on the back of weakening rupee. But, in the late morning trade, market started falling downward and pared most of its initial gains as sentiment turned choppy after the government had put on hold its decision to open the country’s $450 billion supermarket sector to foreign firms. Afterwards, market headed towards its crucial 5,100 level and touched its intraday high a tad below that level in the mid noon session following firm opening in European counterparts. But, in the final hour of trade market witnessed a steep fall of about 50 points due to profit booking in Infrastructure and Pharma sectors. Meanwhile, telecom stocks like Bharti Airtel, Idea Cellular and MTNL failed to gain traction even after Prime Minister Manmohan Singh’s assurance of addressing telecom’s concerns soon. Finally, market ended the trade with a gain of about half a percentage point.

On the global front, the US markets made a mixed closing overnight while, markets rose in Asia on Wednesday on hopes that a meeting of European leaders will finally lead to a plan that will bring an end to the crippling euro-zone 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 IT remained the major gainer, up 1.52% followed by CNX PSU Bank up 0.66% and CNX Realty up by 0.63% while CNX Pharma and CNX Infra declined 1.62% and 0.46% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 5.75% and reached 26.46.

The India VIX witnessed an addition of 5.75% at 26.46 as compared to its previous close of at 25.02 on Monday.

The 50-share S&P CNX Nifty gained 23.45 points or 0.47% to settle at 5,062.60.

Nifty December 2011 futures closed at 5,066.25 at a premium of 3.65 points over spot closing of 5,062.60, while Nifty January 2011 futures were at 5,088.00 at a premium of 25.40 points over spot closing. The near month December 2011 derivatives contract expires on Thursday, December 29, 2011. Nifty December futures saw addition of 9.77% or 2.20 million (mn) units taking the total outstanding open interest (OI) to 24.76 mn units.

From the most active contract by contract value, SBI's December 2011 futures were at a discount of 17.30 point at 1917.70 compared with spot closing of 1935.00. The number of contracts traded was 31,367.

ICICI Bank December 2011 futures were at a premium of 6.40 point at 771.00 compared with spot closing of 764.60. The number of contracts traded was 25,632.

Infosys December 2011 futures were at a premium of 12.90 at 2770.00 compared with spot closing of 2757.10. The number of contracts traded was 12,981.

RIL December 2011 futures were at a premium of 6.90 points at 811.00 compared with spot closing of 804.10. The number of contracts traded was 17,531.

Bharti Airtel December 2011 futures were at a premium of 3.00 point at 379.60 compared with spot closing of 376.60. The number of contracts traded was 8,869.

Among Nifty calls, 5200 SP from the December month expiry was the most active call with an addition of 0.63 million or 11.31%.

Among Nifty puts, 5000 SP from the December month expiry was the most active put with an addition of 0.47 million or 9.79%.

The maximum Call OI outstanding for Calls was at 5200 SP (6.24 mn) and that for Puts was at 5000 SP (5.23 mn).

The respective Support and Resistance levels are: Resistance 5097.15-- Pivot Point 5064.7-- Support 5030.15.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.35 for December -month contract.

The top five scrips with highest PCR on OI were Patni 16.80, Voltas 6.00, Cipla 2.27, GMDC 2.00, and Mphasis 1.50.

Among most active underlying, SBI witnessed an addition of 4.71% of Open Interest in the December month futures contract followed by ICICI Bank which witnessed an addition of 11.84% of Open Interest in the near month contract. Meanwhile RIL witnessed an addition of 8.76% in the December month futures. Also, Tata Steel witnessed an addition of 4.20% in Open Interest in the December month contract. Finally, Pantaloon Retail (India) witnessed an addition of 18.63% of Open Interest in the near month futures contract.