Interim Budget boosts Nifty to close on a strong note

Nifty closed on stronger note well above 6050 levels as Finance Minister P Chidambaram forecasted GDP growth rate of atleast 5.2% in the last two quarters of the current fiscal. Further, assurance of containment of fiscal deficit and current account deficit and announcement of slashing of excise duty rates for select sectors also boosted sentiments. On the global front, Asian stock markets rose on Monday, taking their lead from strong gains on Wall Street despite weaker-than-expected Japanese growth figures. Additionally, European stocks inched higher in early trade on Monday, extending a two-week rally and tracking gains in Asia as worries over emerging markets eased.

Back home, Nifty made a cautious but positive start on Monday morning, extending its sudden spurt in the last session. Though, the traders remained a bit cautious ahead of the interim budget, scheduled to be presented by Finance Minister P. Chidambaram later in the day. Further, Nifty slumped below the neutral, initially reacting to the budget, however steadied later, supported by persistent buying in bluchips. Meanwhile, in order to spur demand and boost investments in manufacturing sector the finance minister announced tax cuts for consumer durable industry and a sharp 4 percentage point cut in cars, motorcycles, scooters and telecom handsets. There was some jitters in the market after the interim budget proposed to raise close to Rs 6,000 crore through Securities Transaction Tax (STT) in the next fiscal, however, the government lowered its STT target to Rs 5,497 crore from Rs 6,720 crore for the current fiscal. A majority of the market participants have been demanding removal or lowering of this tax. Also the super-rich tax was extended in 2014-15 as well. In the previous Budget (2013-14 fiscal), the government imposed a 10 per cent surcharge for a year on people earning income above Rs 1 crore, covering 42,800 individuals and entities. However, with the budget announcements banking sector came into action, except the PSU banks as the FM announced a lower capital infusion to PSU banks of Rs 11200 crore in FY15. Auto stocks too gathered speed with announcements in Small Cars, Motorcycle, Scooters and Commercial Vehicles - from 12% to 8%, SUVs  from 30% to 24%, Large and Mid-segment Cars - from 27/24% to 24/20%. Though, the capital goods sector lost their steam despite the announcement of excise duty cuts, considering it too little too late.

Meanwhile, sectoral indices on the NSE made positive closing.  CNX Realty down by 1.16%, CNX Metal down by 0.71%, CNX PSU Bank down by 0.22%, CNX PSE down by 0.09% and CNX Media down by 0.06%  were remained the top losers in the trade. While, CNX Bank up by 1.20%, CNX Finance up by 1.20%, CNX Auto up by 0.72%, CNX Service up by 0.67% and CNX Pharma up by 0.62% remained the gainers in the trade.

The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, down by 4.98% and reached 15.83.The 50-share CNX Nifty increased by 24.95 points or 0.41% to settle at 6,073.30.

Nifty February 2014 futures closed at 6091.2 on Monday at a premium of 17.9 points over spot closing of 6,073.30, while Nifty March 2014 futures ended at 6123.85 at a premium of 50.55 points over spot closing. Nifty February futures saw an addition of 0.04 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, DLF February 2014 futures were at a discount of 0.15 points at 142.35 compared with spot closing of 142.50. The number of contracts traded was 9,105. 

Tata Motors February 2014 futures were at a premium of 1.1 points at 387.7 compared with spot closing of 386.60. The number of contracts traded was 18,411. 

Reliance Industries February 2014 futures traded at a premium of 0.85 points at 813.6 compared with spot closing of 812.75. The number of contracts traded was 12,866.

Tata Steel February 2014 futures were at a discount of 0.60 points at 374.7 compared with spot closing of 375.30. The number of contracts traded was 11,043. 

SBI February 2014 futures were at a discount of 0.80 points at 1475.55 compared with spot closing of 1,476.35. The number of contracts traded was 28,664. 

Among Nifty calls, 6,200 SP from the February month expiry was the most active call with an addition of 0.23 million in open interest.

Among Nifty puts, 6,000 SP from the February month expiry was the most active put with an addition of 1.29 million open interests.

The maximum OI outstanding for Calls was at 6,200 SP (6.56 mn) and that for Puts was at 6,000 SP (10.01 mn).The respective Support and Resistance levels of Nifty are: Resistance 6089.87-- Pivot Point 6064.08- Support- 6047.52.

The Nifty Put Call Ratio (PCR) OI wise, finally stood at 1.29 for February month contract. The top five scrips with highest PCR on OI were HCL Tech 1.56, Auro Pharma 1.17, M&M 1.10, Tata Motors 1.01 and Infosys 1.00.

Among most active underlying, State Bank of India witnessed contraction of 0.08 million of Open Interest in the February month futures contract, followed by United Spirits witnessing  contraction  of 0.65 million of Open Interest in the February month contract; Reliance Industries witnessed contraction of 0.19 million of Open Interest in the February month futures. TCS witnessed contraction of 0.04 million of Open Interest in the February month contract and ICICI Bank witnessed contraction of 0.53 million in Open Interest in the expiring February month’s future contract.