Short covering in late hour helps Nifty to snap three-days losing streak

Nifty snapped three-days losing streak, amid a volatile trading session on Tuesday, on the back of short covering in index heavyweights like Reliance Industries, Bharti Airtel and Infosys. The benchmark traded near its neutral line throughout the day’s trade but, pulled back sharply in the last half an hour of trade and closed tad over its crucial 4,800 mark. The rally was led by gains in metals, auto and power stocks. Global cues remained subdued as all the Asian equity indices ended the day’s trade in the negative terrain on mounting worries that a deal by European Union leaders to contain the region’s debt crisis would not be enough to solve its fiscal woes.

After hitting its lowest levels in 2-1/2 weeks in early trade, market pared all its initial losses and turned positive as investors went for the beaten down fundamentally strong stocks. Meanwhile, PSU oil marketing companies like BPCL, HPCL and IOC edged higher in early trade as international crude oil prices declined on doubts over European pact. Moreover, IT stocks harden as rupee hits record low against dollar. Afterwards, the index traded near its neutral line till early noon trade due to lack of any major trigger. But, it gained strength in mid noon session following positive start in European counterparts. In the late trade, market took U-turn as bank stocks extended their recent losses triggered by worries of rising defaults in a slowing economy, with ICICI Bank hitting 52 week low. Moreover, the sentiment also hurt after shares of Essar group companies, Essar Shipping and Essar Ports ended in the red after the Central Bureau of Investigation filed charges against five Essar group executives as part of a probe into a multi-billion-dollar telecoms case. But it was the last half an hour of trade where market witnessed a sharp jump of about 70 points and snapped the day’s trade near its intraday high recapturing its crucial 4,800 level as short-covering witnessed in metals, auto and energy stocks.

On the global front, the US markets despite some last hour recovery bid could not manage a close in green and all the major indices lost over a percent while, Asia markets declined on Tuesday, with exporters and resource stocks weak after ratings firms issued disfavoring assessments of European leaders’ latest plans to stem the debt crisis. However, European counterparts were trading in the green at this point of time. Back home, most of the sectoral indices on the NSE settled in the positive territory with CNX Metal gaining the most, up 2.19% followed by CNX Energy up by 1.39% and CNX Auto up by 1.08% while, CNX PSU Bank down by 0.16% and CNX Media down by 0.11% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, tumbled 3.96% and reached 28.11.

The India VIX witnessed a contraction of 3.96% at 28.11 as compared to its previous close of 29.27 on Thursday.

The 50-share S&P CNX Nifty gained 36.00 points or 0.76% to settle at 4,800.60.

Nifty December 2011 futures closed at 4,836.75 at a premium of 36.15 points over spot closing of 4,800.60, while Nifty January 2011 futures were at 4,857.85 at a premium of 57.25 points over spot closing. The near month December 2011 derivatives contract expires on Thursday, December 29, 2011. Nifty December futures saw addition of 6.92% or 1.43 million (mn) units taking the total outstanding open interest (OI) to 22.14 mn units.

From the most active contract by contract value, SBI’s December 2011 futures were at a discount of 10.00 point at 1797.00 compared with spot closing of 1807.00. The number of contracts traded was 35,730.

ICICI Bank December 2011 futures were at a premium of 3.70 point at 713.00 compared with spot closing of 709.30. The number of contracts traded was 31,988.

L&T December 2011 futures were at a premium of 5.60 at 1180.00 compared with spot closing of 1174.40. The number of contracts traded was 18,458.

Infosys December 2011 futures were at a premium of 10.00 points at 2760.00 compared with spot closing of 2750.00. The number of contracts traded was 14,156.

RIL December 2011 futures were at a premium of 3.35 point at 747.00 compared with spot closing of 743.65. The number of contracts traded was 24,352.Among Nifty calls, 4900 SP from the December month expiry was the most active call with an addition of 0.31 million or 6.79%.

Among Nifty puts, 4700 SP from the December month expiry was the most active put with a addition of 0.33 million or 3.92%.

The maximum Call OI outstanding for Calls was at 4900 SP (4.87mn) and that for Puts was at 4700 SP (8.77 mn).

The respective Support and Resistance levels are: Resistance 4840.70 -- Pivot Point 4784.60 -- Support 4744.50.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.07 for December -month contract.

The top five scrips with highest PCR on OI were Patni 11.81, Voltas 6.00, Bombay Rayon Fashions 4.00, Cipla 1.78 and Mphasis 1.50.

Among most active underlying, SBI witnessed an addition of 3.08% of Open Interest in the December month futures contract followed by ICICI Bank which witnessed an addition of 9.31% of Open Interest in the near month contract. Meanwhile Reliance Industries witnessed an addition of 1.83% in the December month futures. Also, Tata Steel witnessed an addition of 2.56% in Open Interest in the December month contract. Finally, L&T witnessed an addition of 9.88% of Open Interest in the near month futures contract.