Nifty celebrates Europe's debt accord with 3% gain

The Indian equity markets were seen in celebration mood with Nifty ending the session in a firm trade adding gains of around 3% to close the session above crucial 5,350 mark as investors piled up the position on reports of breakthrough in the sovereign debt crisis in the euro zone. Earlier, the benchmarks got a huge gap-up start, better than what marketmen could have expected on European debt accord. All the sectoral gauges were showing good gain and the metal sector was in most jubilant mood leading the rally. The domestic equity markets don’t seem to be in a mood to lose control over the stupendous gains what they had gathered with the start of the session. However, on the same time the PSU oil marketing companies turned in somber mood on account of the international crude prices which surged overnight. Investors were so optimistic that they didn’t paid heed towards the weekly inflation numbers which has surged to 11.43% for the week ended October 15 from 10.60% in the previous week. However, weakness did crept in the afternoon trades as the benchmark equity indices drifted and pared off some gains on back of an uninspiring opening in European markets which opened with marginal gains but soon started receding to lower levels. But later at the end, benchmarks regained strength and continued its firm trade as buying emerged among the frontline counters. Metal sectors were seen rallying in the market on back of good support from Sterlite Industries, Hindalco and Jindal Steel which were seen trading with around 7 to 11% gain. Apart from this, other metal shares rose on the local bourses as LMEX, a gauge of six metals traded on the London Metal Exchange, jumped on Thursday, October 27, 2011. Capital Goods sector were up due to heavy buying in front line counters like L&T which surged by more than 4% along with support from stocks like ABB, Siemens, BHEL, Praj Industries, BEML and Punj Lloyd.

On the global front, overnight the US markets surged 3 percent on European debt accord. It closed higher on back of announcement of three pronged plan which included a 50 percent write-down on Greek government debt, increased leveraging of the European Financial Stability Facility bailout mechanism and agreements on plan to recapitalize the region's banks. Also, the sentiments were positive on reports that economy grew at its fastest pace in a year in the third quarter, a welcome respite for a financial system that seemed on the brink of a recession some weeks ago. Moreover, most of the European counterparts were trading in the red where major indices like CAC, DAX and FTSE were trading with a loss of about quarter percent at this point of time. Back home, all the sectoral indices on the NSE settled in the positive territory with CNX Realty gaining the most, ending with an addition of around six percent followed by Bank Nifty up by 3.88% and CNX Infra up by 2.86% in the trade. The India Volatility Index (VIX) witnessed a contraction of 1.80% at 20.89 on Friday as compared to its previous close of at 22.69 on Wednesday.

The 50-share S&P CNX Nifty accumulating gains of 158.90 points or 3.05% and settled at 5,360.70.

Nifty November 2011 futures closed at 5,384.50 at a premium of 23.80 points over spot closing of 5,360.70, while Nifty December 2011 futures were at 5,409.00 at a premium of 48.30 points over spot closing. The near month November 2011 derivatives contract expires on Thursday, November 24, 2011. Nifty November futures saw addition of 3.53 million (mn) units, taking the total outstanding open interest (OI) to 30.33 mn units.

From the most active contract by contract value, SBI’s November 2011 futures were at a premium of 6.85 point at 1920.00 compared with spot closing of 1913.15. The number of contracts traded was 27,338.

Infosys November 2011 futures were at a premium of 25.95 point at 2882.80 compared with spot closing of 2856.85. The number of contracts traded was 17,317.

ICICI Bank November 2011 futures were at a premium of 4.70 point at 936.70 compared with spot closing of 932.00. The number of contracts traded was 23,298.

L&T November 2011 futures were at a premium of 4.85 point at 1421.00 compared with spot closing of 1416.15. The number of contracts traded was 13,977.

Axis Bank November 2011 futures were at a premium of 6.40 point at 1157.40 compared with spot closing of 1151.00. The number of contracts traded was 15,724.

Among Nifty calls, 5400 SP from the November month expiry was the most active call with a addition of 0.41 million or 9.60%

Among Nifty puts, 5300 SP from the November month expiry was the most active put with a addition of 2.38 million or 330.90%.

The maximum Call OI outstanding for Calls was at 5400 SP (4.73 mn) and that for Puts was at 5300 SP (3.10 mn).

The respective Support and Resistance levels are: Resistance 5399.33--Pivot Point 5361.06-- Support 5322.43.

The Nifty Put Call Ratio (PCR) OI wise stood at 1.51 for November-month contract.

The top five scrips with highest PCR on OI were Dr Reddy’s Lab 2.90, Tata Chemicals 2.00, Ambuja Cement 1.65, Bajaj Auto 1.59 and Wipro 1.57.

Among most active underlying, SBI witnessed an addition of 6.33% of Open Interest (OI) in the November month futures contract followed by Infosys witnessed an addition of 12.58% of Open Interest (OI) in the near month contract. Meanwhile L&T witnessed an addition of 2.66% of OI in the November month futures. Also, ICICI Bank witnessed a addition of 10.07% of Open Interest (OI) in the November month contract followed by Reliance which witnessed an addition of 7.95% of Open Interest (OI) in the November month contract.