The markets have rallied higher on a week-on-week basis on negative volumes growth as the players seem to have abstained from large scale trading. The outstanding net long positions are stagnant on a week-on-week basis. This is a negative development as bulls show lower risk appetite. The outlook appears to be cautiously optimistic as the markets are need to trade above the previous highs of 2014 on the Nifty. Last week, we had accurately predicted that the indices were due to surpass the previous highs. The Nifty is trading above a short term support at the 2004 levels which if violated during the week,  will see 1990 - 1992 levels. The Nifty December futures trade at Rs 3 discount to cash. The stocks of the week are likely to be NTPC, Reliance Inds & Tisco.

Outstanding positions - week on week

Market internals - outstandings - all Rs crores

Description	Rupees crores	Call options	Put options	Net position
Index Futures	2,326 210
Stock futures	9,433 288
Index options		1026 87	1388 272	(-) 362  185
Stock options		2196 124	627 78	1569  46
Total Futures	11,759 78	Total options - net	1207 139
Gross longs ( F+O )	14,981 289	Net longs ( F+O )	12,966 61

Observation - The net out-standings have languished as the above table indicates. This is a negative development as bulls show a lower risk appetite. Click here to view previous weeks file

Note - Previous weekend gross long positions Rs 14,692 crs, net long positions Rs 13,027 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 9,150 crs in open interest which is a substantial portion of the entire market open interest. The FII's seem to be concentrating on stock futures and then Index futures in that order of preference. Please note that FII's have bought more futures than they have sold on Dec 16, 2004. That indicates a buying bias in the near term. Purchases of Rs 346 Crs are seen in the cash segment on that day.

Source - The National Stock Exchange.

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The traded volumes have dived. The traded turnover was lower in all the segments. That is a negative sign as the markets are rising on lower volumes. We want the volumes to rise in the coming week if the markets are to see retail participation. The combination of traded volumes, open interest and put / call ratios are a reliable indicator of the undercurrents. The outlook appears  optimistic in the short term. Click here to view previous weeks file

Description	Previous week - Rs. crores	Current - Rs. crores	Change - Rs crores
Index Futures	12,937	11,638	1,299
Stock futures	34,542	31,302	3,240
Totals - a	47,479	42,940	4,539
Index calls	1,031	963	68
Stock calls	3,214	2,933	281
Totals - b	4,245	3,896	349
Index puts	1,128	881	247
Stock puts	811	715	96
Totals - c	1,939	1,596	343
Grand totals ( a+b+c)	53,663	48,432	5,231

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	1.38 : 1	Previous week	1.21: 1
PCR - Stocks	0.26 : 1	Previous week	0.24 : 1
PCR - Total	0.32 : 1	Previous week	0.29 : 1

Observation - The PCR shows a tilt towards the bears as the ratios are showing slight bearishness on a week-on-week basis. Bears have enhanced exposure on their Nifty short positions. The Nifty PCR remaining outright bearish, the shorts have seen a slight increase. The individual stocks show a minor increase in short positions too. This ( PCR ) will be the one of the most reliable indicator of market trends. The total PCR has remained above the equilibrium point. The equilibrium point is 0.50 : 1. Click here to view previous weeks file

Source - The National Stock Exchange.

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Directional guidance - week on week

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

Calls	Previous week Rs Crs	Current Rs crores	Change Rs Crs
1950 CE	86	68	18
1900 CE	121	111	10
1910 CE	66	64	02
2000 CE	115	146	31
2030 CE	77	109	32
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
2000 PE	27	46	17
1900 PE	234	244	10
2000 PE	78	161	83
1850 PE	122	160	38
1950 PE	187	227	40

Observation - The index contracts show which way the players are tilting. The outstanding positions seem to have increased in the previous week. The bulls have added Rs 33 Crs. Our inference is - watch the 1990 support levels in the coming days. The bears have added Rs 188 Crs. That shows a tendency towards selling at the 1850 - 2000 strikes. The undertone appears cautious for now. Click here to view previous weeks file.

Source - The National Stock Exchange.

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Source - The National Stock Exchange.

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The center stage - week on week

5 Highest outstanding scrips

Futures	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
Reliance	782	886	104
Tisco	802	804	02
NTPC	534	575	41
SBI	487	517	30
Infosy	511	512	01

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
NTPC 80 calls	112	74	38
NTPC 85 calls	69	78	09
Reliance 520 Calls	54	65	11
Reliance 540 calls	62	58	04
TCS 1260 calls	56	55	01

Observation - The action remains polarised around the same big counters - Tisco, Reliance, SBI & NTPC. Outstanding open interest in almost all the stocks has risen - a positive phenomena. Infosys is the new kid on the block. Watch Reliance & Tisco for directional guidance in the coming week.  Click here to view previous weeks file.

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The activity is polarised around the Nifty between the 2000 - 2040 on the long side and NTPC, Reliance, TCS & Tisco in individual stocks.

 

Source - The National Stock Exchange.

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This segment is for paid subscribers only

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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.

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