Nifty witnesses consolidation ahead of RBI policy meet

After a decent last week’s rally, the domestic index Nifty witnessed consolidation and ended flat amid range bound trade as investors awaited central bank’s stance on key rates at the third quarter policy review on January 24. On the global front, the Nikkei ended marginally lower at 8,766, cutting short a four-day winning streak after Greece and its creditors failed to reach a deal over the weekend to avoid a default. European markets have opened on a marginally positive note. Back home, index heavyweight Reliance Industries plunged by nearly three percent on reporting disappointing numbers in the quarter ended December 2011. However, the buyback offer limited the downslide. The company is going to buyback of Rs 10,440 crore worth of shares at up to Rs 870 a share.

Earlier, the Indian equity market made a soft opening following disappointing results from RIL. However, the benchmark recovered immediately and traded flat led by banks and technology stocks. Even the buyback offer from Reliance supported the sentiments. In noon trade market once again dipped into the red as Metal space continued witness selling pressure and lost over two percentage point after LMEX, a gauge of six metals traded on the London Metal Exchange dropped 1.06% on Friday. But in the mid noon session market recaptured its green territory following positive opening in European markets while, Power stocks too supported the sentiments and at the same time stocks like NTPC and Tata Power have gained between 1-2 percent after Manmohan Singh last week pledged help on chronic power shortages in the country after holding a meeting with business leaders on that day. In the last leg of trade nervousness witnessed in the market as investors remained on sidelines ahead of RBI policy meet to be held tomorrow. Consensus estimates are that the Indian central bank will keep both repo and reverse repo rates unchanged at 8.5% and 7.5% respectively however, there are some expectations that the RBI will commit to open market operations (OMO). Finally, Nifty snapped the day’s trade with marginal cut of 2 points.

On the global front, the US markets closed mixed on last trading day of the week on the back of mixed earnings number and eyeing the talks between Greece and its lenders while; in Asia, only a handful of markets remained open for trade on Monday. Japanese markets ended flat on Monday to halt a four-day winning streak, with early gains capped by market worries over Greece after negotiations with private creditors failed, raising the stakes for a meeting later in the day at which euro zone finance ministers will decide terms for a debt restructuring. Moreover, the European counterparts were trading mixed at this point of time. Back home, most of the sectoral indices on the NSE settled in the green, CNX FMCG remained the major gainer, up 1.02% followed by CNX Infra up 0.86% and CNX Realty up by 0.84% while CNX Metal and CNX Energy declined 2.21% and 1.39% respectively in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, surged 0.81% and reached 22.14.

The India VIX witnessed an addition of 0.82% at 22.14 as compared to its previous close of at 21.96 on Friday.

The 50-share S&P CNX Nifty lost 2.35 points or 0.05% to settle at 5,046.25.

Nifty January 2012 futures closed at 5,051.05 at a premium of 4.80 points over spot closing of 5,046.25, while Nifty February 2012 futures were at 5,077.40 at a premium of 31.15 points over spot closing. The near month January 2012 derivatives contract expires on Thursday, January 25, 2012. Nifty January futures saw contraction of 1.98 million (mn) units taking the total outstanding open interest (OI) to 15.79 mn units.

From the most active contract by contract value, L&T January 2012 futures were at a premium of 3.55 point at 1276.55 compared with spot closing of 1273.00. The number of contracts traded was 43,876.

SBI’s January 2012 futures were at a premium of 6.90 point at 1946.90 compared with spot closing of 1940.00. The number of contracts traded was 33,951.

RIL January 2012 futures were at a discount of 0.90 points at 771.10 compared with spot closing of 772.00. The number of contracts traded was 35,520.

Maruti January 2012 futures were at a discount of 6.30 point at 1160.60 compared with spot closing of 1166.90. The number of contracts traded was 24,354.

Axis Bank January 2012 futures were at a discount of 1.40 point at 993.45 compared with spot closing of 994.85. The number of contracts traded was 26,046.

Among Nifty calls, 5200 SP from the January month expiry was the most active call with open interest of 5.44 million.

Among Nifty puts, 4900 SP from the January month expiry was the most active put with open interest of 7.54 million.

The maximum OI outstanding for Calls was at 5200 SP (5.44 mn) and that for Puts was at 4900 SP (7.63 mn).

The respective Support and Resistance levels are: Resistance 5063.41-- Pivot Point 5042.38-- Support 5025.21.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.95 for January-month contract.

The top five scrips with highest PCR on OI were Indusind Bank 21.50, Max India 13.00, Union Bank 13.00, OnMobile 11.00 and JSW Energy 8.25.

Among most active underlying, Reliance Industries witnessed contraction of 18.85% for the Open Interest in the January month futures contract followed by L&T which witnessed contraction of 29.33% of Open Interest in the near month contract. Meanwhile SBI witnessed contraction of 26.56% for the open interest in the January month futures. Also, DLF witnessed contraction of 27.99% in Open Interest in the January month contract. Finally, Axis Bank witnessed contraction of 21.10% of Open Interest in the near month futures contract.