i Develop Stocks Advisory

Nifty March discount widens; investors short RIL, Tata Steel The day of reckoning saw the market slip as the finance minister proposed an increase in short-term capital gains tax to 15 per cent. But the indices gained some ground on buying in banking, pharmaceutical, FMCG and automobile stocks. Nifty March futures settled at 5140.10, a discount of 49 points to the spot which closed 1.81 per cent lower at 5189.55. As expected, Finance Minister P Chidambaram’s Union Budget for 2008-09 concentrated more on agriculture, healthcare and education with the general elections in mind. However, the proposed cut in excise duty for auto and pharma sectors spurred industry specific stocks. Banking stocks, which first tumbled on the FM's proposal of forgoing Rs 60,000 crore of farmer loans, rose on a clarification later that the government will reimburse the PSU banks the amount waived over three years. Intraday, Nifty March futures touched a high of 5241 and low of 5052, a band of around 190 points. Open interest was up 13.92 per cent with turnover at Rs 21,424.69 crore. More of selling was seen in Nifty March contract. Index call of strike 5200 settled at a premium of Rs 195, down Rs 59 from the previous close. Open interest in the contract was up 163 per cent. Nifty 5300 call was trading low at Rs 144.90 with open interest up 153.99 per cent. Open interest in Nifty 5200 put was up 43.51 per cent with high premium of Rs 253. Put of strike price 5100 was trading high at a premium of Rs 206 from the previous Rs 179. Open interest in the contract was up 58.60 per cent. Investors have built positions in the put of strike 4600-5200. "Increase in short term capital gain tax was the major setback. The market recovered some ground on account of buying in banking, pharma and auto stocks. Investors have built short positions in heavyweights like Reliance Industries, Reliance Capital, Tata Steel. Nifty resistance has come down to 5300,” said an analyst with a large brokerage. In stocks futures, State Bank of India March futures shot up to Rs 2,080, up 2.05 per cent from previous close. Open interest in SBI futures was up 21.13 per cent. ICICI Bank March contract saw turnover at Rs 492.55 crore with open interest up 18.56 per cent. Sesa Goa near month ended with gain of 5.49 per cent in price and open interest rising 11.28 per cent. More long positions were built in Essar Oil and Reliance Petro. Nagarjuna Fertilizers March clocked a turnover of Rs 465 crore with open interest up 10.85 per cent. Reliance Energy price was down 2.47 per cent with open interest up 3.79 per cent. National Thermal Power futures was down 1.57 per cent with open interest up 5.49 per cent. ITC futures saw a turnover at Rs 261 crore with open interest up 35.70 per cent. Open interest in Ranbaxy futures was up 6.7 per cent and turnover at Rs 136 crore. Positions were built in index put ranging from 4600 to 5000 levels at high premiums. Nifty resistance is seen at 5300 level. Taking positions in the put contracts reflects the bearish sentiment of investors.