Bulls back in command on RBI’s growth focus; Nifty reclaims 5,100 mark

After a day of consolidation, bulls held on their control throughout the day’s trade on Tuesday and Nifty ended a remarkable day of trade with a gain of over one and half a percent recapturing its crucial 5,100 level as investors welcomed the RBI’s move to cut the cash reserve ratio (CRR) by 50 basis points (bps) and release an additional Rs 32,000 crore into the system. The frontrunners too supported the Nifty to regain its psychological 5,100 mark; L&T rallied close to 6 percent, taking top position in the buying list. SBI, IDFC, and JP Associates gained 4-6 percent. Hindalco and PNB were up by around 4 percent.

Earlier, the Indian market made a positive start but traded in the tight band as investors eyed RBI credit policy review but once the RBI announced the policy, market shot up and recaptured its crucial 5,100 mark. The RBI in the third quarter review of Monetary Policy cut the Cash Reserve Ratio (CRR) by 50 bps to 5.5%. CRR cut will infuse Rs 32,000 crore into the banking system. However, repo and reverse repo have been kept unchanged at 8.5% and 7.5%, respectively. RBI has kept inflation forecast unchanged at 7%. GDP forecast has been brought down to 7% from 7.6% earlier. The PSU banking index on NSE rocketed over five percent post the RBI move while, encouraging earnings announcement by Yes Bank too supported sentiments. Afterwards, market held its crucial 5,100 level despite some profit booking in front-liners amid weak opening in European counterparts. Finally, Nifty ended the day’s trade with a gain of over 80 points.

On the global front, the US markets made a mixed closing overnight while, only a handful of markets remained open for trade in Asia, where Japanese Nikkei average rose to its highest closing level in nearly three months on Tuesday on expectations that a Greek debt swap deal will still be reached even after European finance ministers rejected an offer by Greece’s private creditors. However, all the European counterparts were trading in red where CAC, DAX and FTSE were down by half percent. Back home, all the sectoral indices on the NSE settled in the positive territory with CNX PSU Bank gaining the most, up 5.07% followed by Bank Nifty up by 3.30% and CNX Infra up by 2.66% in the trade. The India Volatility Index (VIX), a gauge for market’s short term expectation of volatility, tumbled 3.25% and reached 21.42.

The India VIX witnessed an addition of 3.25% at 21.42 as compared to its previous close of at 22.14 on Monday.

The 50-share S&P CNX Nifty gained 81.10 points or 1.61% to settle at 5,127.35.

Nifty January 2012 futures closed at 5120.45 at a discount of 6.90 points over spot closing of 5,127.35, while Nifty February 2012 futures were at 5,148.30 at a premium of 20.95 points over spot closing. The near month January 2012 derivatives contract expires on Thursday, January 25, 2012. Nifty January futures saw addition of 3.77 million (mn) units taking the total outstanding open interest (OI) to 19.65 mn units.

From the most active contract by contract value, SBI January 2012 futures were at a premium of 4.70 point at 2045.50 compared with spot closing of 2,040.80. The number of contracts traded was 77,130.

Axis Bank’s January 2012 futures were at a premium of 0.50 point at 1033.10 compared with spot closing of 1,032.60. The number of contracts traded was 39,959.

L&T January 2012 futures were at a discount of 6.20 points at 1345.65 compared with spot closing of 1351.85. The number of contracts traded was 28,771.

ICICI Bank January 2012 futures were at a discount of 3.50 point at 884.55 compared with spot closing of 888.05. The number of contracts traded was 39,729.

Tata Motors January 2012 futures were at a premium of 0.35 point at 222.30 compared with spot closing of 221.95. The number of contracts traded was 16,608.

Among Nifty calls, 5100 SP from the January month expiry was the most active call with open interest of 4.09 million.

Among Nifty puts, 5100 SP from the January month expiry was the most active put with open interest of 3.88 million.

The respective Support and Resistance levels are: Resistance 5162.33 -- Pivot Point 5106.07 -- Support 5071.08.

The Nifty Put Call Ratio (PCR) OI wise stood at 2.54 for January-month contract.

The top five scrips with highest PCR on OI were Indusind Bank 34.50, IGL 17.67, Union Bank 13.00, Dabur 8.18 and MCLEODRUSS 7.89.

The most active underlying were, SBI, ICICI Bank, RIL, Axis Bank and L&T.