The markets have rallied smartly on a week-on-week basis on significant volumes growth as the players seem to have participated well in the week gone by. The outstanding net long positions are up approx 12 % on a week-on-week basis. This is a positive development as the bulls show a higher risk appetite. The outlook appears to be optimistic as the markets are trading above the short term resistance at the 2064 levels which points towards a possibility of 2085 - 2120 levels if more buying occurs. The Nifty February futures trade at Rs 6 premium to cash - as against at Rs 3 discount to cash last weekend. 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	2,521 232
Stock futures	9,276 860
Index options		952 322	995 405	(-) 43  83
Stock options		1394 765	430 254	964  511
Total Futures	11,797 1092	Total options - net	921 428
Gross longs ( F+O )	14,143 2179	Net longs ( F+O )	12,718 1520

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

Note - Previous weekend gross long positions Rs 11,964 crs, net long positions Rs 11,198 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 8,826 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 bought on Feb 03, 2005. That indicates a selling bias in the near term. Purchases of Rs. 489 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. We want the volumes and prices 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 nervous in the short term. Click here to view previous weeks file

Description	Previous week - Rs. crores	Current - Rs. crores	Change - Rs crores
Index Futures	15,330	17,554	2,224
Stock futures	39,488	39,078	410
Totals - a	54,818	56,632	1,814
Index calls	1,314	1,665	351
Stock calls	2,762	3,797	1,035
Totals - b	4,076	5,462	1,386
Index puts	1,022	1,419	397
Stock puts	807	727	80
Totals - c	1,829	2,146	317
Grand totals ( a+b+c)	60,723	64,240	3,517

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	1.06 : 1	Previous week	0.95: 1
PCR - Stocks	0.30 : 1	Previous week	0.23 : 1
PCR - Total	0.35 : 1	Previous week	0.30 : 1

Observation - The PCR shows a tilt towards the bears as the ratios are showing ramping up of shorts on a week-on-week basis. The Nifty PCR remaining outright bearish, the shorts have seen a sharp rise. The individual stocks show an 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
2100  CE	31	200	169
2000  CE	209	183	26
1950  CE	222	171	51
2050  CE	34	114	80
2150  CE	02	68	66
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
1900  PE	202	174	28
2050  PE	33	174	141
2000  PE	86	162	76
1950  PE	121	129	08
2100  PE	10	89	79

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 238 Crs - showing a preference for the 2050 - 2100 strikes. Our inference is - watch the 2064 support levels in the coming days. The bears have added Rs. 276 Crs. That shows a tendency towards selling at the 2000 - 2100 strikes. The undertone appears optimistic 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	863	829	34
Tisco	952	1050	98
NTPC	588	611	23
Infosys	526	539	13
ONGC	398	486	88

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
NTPC 90  calls	21	72	51
RELIANCE 540 calls	14	52	38
NTPC 95  Calls	03	51	48
TISCO 400 calls	09	42	33
NTPC 85  calls	44	35	09

Observation - The action remains polarised around the same big counters - Tisco, Reliance & NTPC. Outstanding open interest in almost all of the stocks has risen - a routine phenomena after expiry. ONGC 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 2050 - 2150 on the long side and ACC, NTPC & 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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