Nifty rebounds sharply from four-month low on value buying

Nifty bounced back from a nearly four-month low hit earlier on Tuesday, erasing losses of more than 1%, as some blue chips recovered on value-buying after the index had fallen in six out of seven previous sessions. On the global front, Asian shares stumbled on Tuesday, after disappointing data casted doubt on the strength of world’s largest economy and gave investors little reason to hope for stability in emerging markets after their recent rout. Additionally, European shares sank in early trade on Tuesday, retreating for the seventh time in nine sessions and tracking a sell-off on Wall Street and in Asia sparked by lower-than-expected US manufacturing data.

Back home, extending previous session’s bloodbath, Nifty made a gap down start in early trade in red with IT exporters leading the decline after weaker-than-expected US manufacturing data. Investors remained concerned as the global credit rating agency and consulting firm Fitch on Monday called on the top brass of the Finance Ministry and raised concerns about country’s fiscal deficit. Select telecom stocks continue to feel pressure for second day in a row, as telecom firms have together put in bids of around Rs 42,000 crore on the first day of 2G spectrum auctions, giving respite to the government who had targeted Rs 40,874.50 crore from auctions and other charges.

In the afternoon deals, index started recouping lost ground with the recovery of banking shares. While stocks from Consumer Durables counters too were supportive to the uptrend. Nevertheless, top gainers of the session, besides banking stocks, were stocks from FMCG and Energy counters. Recovery in banking shares was led by index heavyweight, State Bank of India (SBI), which rallied over 1.5% for the session. Additionally, telecom stocks, viz Bharti Airtel and Idea Cellular, etc were in demand on second day of spectrum auction. According to media reports, ninth round of telecom spectrum auction received bid of Rs 497 crore/MHz so far for the Mumbai’s 900 MHz band. On the flip side, IT, Technology and Healthcare counters were the top losers of the session. Information technology stocks cracked over 2% after weak US data casted doubt on the strength of the US economy, a major market for IT exporters. The NSE’s 50-share broadly followed index Nifty declined by just one point and managed to end above the psychological 6,000 support level.

Meanwhile, sectoral indices on the NSE made a positive closing. CNX IT down by 1.84%, CNX Pharma down by 0.65%, CNX Metal down by 0.64%, CNX Service down by 0.12% and CNX PSE down by 0.10% were remained the top losers in the trade. While, CNX PSU Bank up by 2.01%, CNX Infra up by 1.45%, CNX Bank up by 0.88%, CNX FMCG up by 0.84%, and CNX Realty up by 0.69% remained the gainer in the trade.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, up by 2.29% and reached 18.69.The 50-share CNX Nifty decreased by 0.90 points or 0.01% to settle at 6,000.90.

Nifty February 2014 futures closed at 6037.85 on Tuesday at a premium of 36.95 points over spot closing of 6,000.90, while Nifty March 2014 futures ended at 6074.25 at a premium of 73.35 points over spot closing. Nifty February futures saw an addition of 0.19 million (mn) units taking the total outstanding open interest (OI) to 16.25 mn units. The near month February 2014 derivatives contract will expire on February 26, 2014.

From the most active contracts, Tata Motors February 2014 futures were at a premium of 1.75 points at 347.85 compared with spot closing of 346.10. The number of contracts traded was 15,537. 

Tata Steel February 2014 futures were at a premium of 0.70 points at 345.90 compared with spot closing of 345.20. The number of contracts traded was 11,313. 

Reliance Industries February 2014 futures traded at a premium of 4.55 points at 828.30 compared with spot closing of 823.75. The number of contracts traded was 13,656.

ICICI Bank February 2014 futures were at a premium of 6.85 points at 976.45 compared with spot closing of 969.60. The number of contracts traded was 21,404. 

SBI February 2014 futures were at a premium of 0.60 points at 1519.80 compared with spot closing of 1519.20. The number of contracts traded was 43,176.    Among Nifty calls, 6,200 SP from the February month expiry was the most active call with an addition of 1.05 million in open interest.

Among Nifty puts, 6,000 SP from the February month expiry was the most active put with contraction of 0.34 million open interests.

The maximum OI outstanding for Calls was at 6,200 SP (4.95 mn) and that for Puts was at 6,000 SP (6.99 mn). The respective Support and Resistance levels of Nifty are: Resistance 6034.7 -- Pivot Point 5984 - Support- 5950.2.

The Nifty Put Call Ratio (PCR) OI wise, finally stood at 1.31 for February month contract. The top five scrips with highest PCR on OI were Grasim 1.54, PNB 1.43, Jindal Steel 1.24, Tata Chemical 1.06 and Cairn 1.03.

Among most active underlying, State Bank of India witnessed addition of 0.02 million of Open Interest in the February month futures contract, followed by United Spirits witnessing  an addition of 0.06 million of Open Interest in the February month contract; Reliance Industries witnessed an addition of 0.31 million of Open Interest in the February month futures. ICICI Bank witnessed an addition of 0.36 million of Open Interest in the February month contract and TCS witnessed contraction of 0.01 million in Open Interest in the expiring February month’s future contract.