The Derivatives Denizen.

Your one stop derivatives guide.

May 09, 2004

Markets seek directions. Volumes stagnate.

Outstanding long positions are the only ray of hope.

The markets have been steady on a week-on-week basis as the bulls pared positions at higher levels and await the election tallies. The Outstanding net long positions are up approximately 45 % on a week-on-week basis. This is an encouraging development as the bulls show conviction even in lateral markets. The traded volumes were 10 % lower. The outlook appears cautious as the markets are seeking a clear sense of direction. The 1750 supports are a crucial level to watch for now.

Market internals - outstandings - all Rs crores

Description	Rupees crores	Call options	Put options	Net position
Index Futures	1,871 283
Stock futures	5,259 312
Index options		676 342	340 204	336 138
Stock options		1131 532	248 142	883 390
Total Futures	7,130 1595	Total options - net	1219 528
Gross longs ( F+ O )	8,937 2469	Net longs ( F+ O )	8,349 2123

Observation - The outstandings have increased as the above table indicates. The overall rise in outstandings shows an air of optimism in the undertone - which is a positive sign. The coming days will be governed by news driven considerations. Click here to view previous weeks file

Note - Previous weekend gross long positions Rs 6,468 crs, net long positions Rs 6,226 crs.

Source - The National Stock Exchange.

The traded volumes have fallen - but it must be remembered that the week was governed by political compulsions. The traded turnover was lower all round as the table below indicates. We expect this trend to continue in the coming week. The combination of traded volumes, open interest and market breadth are a reliable indicator of the undercurrents. The outlook appears brittle in the short term.

Description	Previous week - Rs. crores	Current - Rs. crores	Change - Rs crores
Index Futures	18,013	15,493	2,520
Stock futures	27,629	23,611	4,018
Totals - a	45,642	39,104	6,538
Index calls	1,094	1,877	783
Stock calls	1,958	2,714	756
Totals - b	3,052	4,591	1,539
Index puts	920	900	20
Stock puts	742	569	173
Totals - c	1,662	1,469	193
Grand totals ( a+b+c)	50,356	45,164	5,192

Source - The National Stock Exchange.

PCR - Index	0.52 : 1	Previous week	0.42: 1
PCR - Stocks	0.24 : 1	Previous week	0.17 : 1
PCR - Total	0.27 : 1	Previous week	0.19 : 1

Observation - The PCR shows a tilt towards the bears as the ratios are showing higher short positions on a week-on-week basis. The Nifty PCR has turned outright bearish, the shorts have risen faster than the longs. The total PCR has remained below the optimal point, though is tilting towards the bears too. The equilibrium point is 0.50 : 1. Click here to view previous weeks file.

Source - The National Stock Exchange.

Market internals - Nifty put / call trends - 5 highest open interest contracts

Calls	Previous week Rs Crs	Current Rs crores	Change Rs Crs
1900 CE	90	154	64
1800 CE	62	148	86
1850 CE	44	101	57
1830 CE	16	31	15
1820 CE	17	31	14
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
1800 PE	38	78	40
1750 PE	20	70	50
1700 PE	16	53	37
1900 PE	15	17	02
1780 PE	04	15	11

Observation - The index contracts show which way the players are tilting. The outstanding positions seem to have increased all round due to expiry. The bulls have added Rs 236 Crs. Our inference is - watch the 1760 levels for coming week. The bears have added Rs 140 Crs. That shows a tendency to square up the Nifty longs at higher levels. The undertone appears cautious for now. Click here to view previous weeks file

Source - The National Stock Exchange.

5 Highest outstanding scrips

Futures	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
Tisco	532	579	47
Reliance	462	523	61
Telco	297	339	42
Infosys	315	297	18
SBI	283	296	13
Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
RIL 540 calls	31	46	15
ONGC 860 calls	19	45	26
SBI 660 calls	18	35	17
RIL 560 calls	21	31	10
Tisco 400 calls	23	29	06

Observation - The action remains polarised around the same big counters - Tisco, Reliance, SBI & Telco. Infosys is the new addition which has replaced ONGC in the recent past. Outstanding open interest in most of the stocks has risen - a sign of optimism. Watch Reliance, Infosys and Tisco for directional guidance in the coming week. Click here to view previous weeks file.

Most active calls - top 10

Most active puts - top 10

The activity is polarised around the Nifty between the 1900 - 1800 on the long side and Reliance, SBI, Tisco & Telco in individual stocks.

 

Source - The National Stock Exchange.

This segment is for paid subscribers only.

Have a profitable day.

 

Vijay L. Bhambwani

Ceo :- Bsplindia.com

The author is a Mumbai  based investment consultant and invites feedback at Vijay@BSPLindia.com and  (022) 23438482 / 23400345.

SEBI disclosure -  The author has no positions in  the stocks mentioned above.

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