The markets have rallied higher on a week-on-week basis on good volumes growth as the players seem to have participated well in the weeks trading. The outstanding net long positions are up approx 8 % on a week-on-week basis. This is a positive development as bulls show higher risk appetite. The outlook appears to be cautiously optimistic as the markets are trading above the previous highs of 2054 on the Nifty. The Nifty is trading above a short term support at the 2054 levels which if violated during the week,  will see 2040 - 2045 levels. The Nifty December futures trade at Rs 4 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	2,724 398
Stock futures	10,266 833
Index options		1040 14	1517 129	(-) 477  115
Stock options		2339 143	734 107	1605  36
Total Futures	12,990 1231	Total options - net	1128 79
Gross longs ( F+O )	16,369 1388	Net longs ( F+O )	14,118 1152

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

Note - Previous weekend gross long positions Rs 14,981 crs, net long positions Rs 12,966 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 9,770 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 sold more futures than they have bought on Dec 23, 2004. That indicates a selling bias in the near term. Purchases of Rs 236 Crs are seen in the cash segment on that day.

Source - The National Stock Exchange.

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The traded volumes have jumped. The traded turnover was higher in almost all the segments. That is a positive sign as the markets are rising on higher 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	11,638	12,155	517
Stock futures	31,302	39,358	8,056
Totals - a	42,940	51,513	8,573
Index calls	963	1,021	58
Stock calls	2,933	3,744	811
Totals - b	3,896	4,765	869
Index puts	881	787	94
Stock puts	715	861	146
Totals - c	1,596	1,648	52
Grand totals ( a+b+c)	48,432	57,926	9,494

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	1.48 : 1	Previous week	1.38: 1
PCR - Stocks	0.30 : 1	Previous week	0.26 : 1
PCR - Total	0.36 : 1	Previous week	0.32 : 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	68	51	17
1900 CE	111	92	19
1910 CE	64	63	01
2000 CE	146	96	50
2030 CE	109	88	21
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
2000 PE Jan	46	67	21
1900 PE	244	236	08
2000 PE	161	193	32
1850 PE	160	158	02
1950 PE	227	224	03

Observation - The index contracts show which way the players are tilting. The outstanding positions seem to have decreased in the previous week. The bulls have reduced Rs 108 Crs. Our inference is - watch the 2040 support levels in the coming days. The bears have added Rs 40 Crs. That shows a tendency towards selling at the 2000 strike. 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	886	943	57
Tisco	804	865	61
NTPC	575	630	55
SBI	517	540	23
Infosy	512	532	20

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
NTPC 80 calls	74	54	20
NTPC 85 calls	78	85	07
Reliance 520 Calls	65	67	02
Reliance 540 calls	58	58	00
TCS 1260 calls	55	53	02

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 - 2050 on the long side and Reliance, Satyam Computers & Tisco in individual stocks.

 

Source - The National Stock Exchange.

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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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