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. Part of the growth in traded volumes can also be attributed to the expiry of the f&o series. The outstanding net long positions are down approx 2 % on a week-on-week basis. This is a positive development as the fall in open interest is one of the lowest after expiry. The bulls show higher risk appetite. The outlook appears to be optimistic as the markets are trading above the short term support at the 2068 levels which if violated during the week,  will see 2050 - 2055 levels. The Nifty January futures trade at Rs 6 premium 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	2,403 321
Stock futures	10,256 10
Index options		611 429	485 1032	126  603
Stock options		1214 1125	224 510	990  615
Total Futures	12,659 331	Total options - net	1116 12
Gross longs ( F+O )	14,484 1885	Net longs ( F+O )	13,775 343

Observation - The net out-standings have fallen as the above table indicates. This is a positive development as bulls show a relatively higher risk appetite - the fall in open interest is almost negligible after expiry. Click here to view previous weeks file

Note - Previous weekend gross long positions Rs 16,369 crs, net long positions Rs 14,118 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 8,868 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 30, 2004. That indicates a selling bias in the near term. Purchases of Rs 134 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 all the segments. That is a positive sign as the markets are rising on higher volumes. Part of the reason of this jump in volumes can be attributed to the f&o expiry. 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	12,155	13,896	1,741
Stock futures	39,358	48,387	9,029
Totals - a	51,513	62,283	10,770
Index calls	1,021	1,532	511
Stock calls	3,744	4,740	996
Totals - b	4,765	6,272	1,507
Index puts	787	937	150
Stock puts	861	947	86
Totals - c	1,648	1,884	236
Grand totals ( a+b+c)	57,926	70,439	12,513

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	0.81 : 1	Previous week	1.48: 1
PCR - Stocks	0.19 : 1	Previous week	0.30 : 1
PCR - Total	0.22 : 1	Previous week	0.36 : 1

Observation - The PCR shows a tilt towards the bull as the ratios are showing squaring up of shorts on a week-on-week basis. The Nifty PCR remaining outright bearish, the shorts have seen a significant fall. The individual stocks show a decrease 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
2050 CE	42	165	123
2100 CE	NA	136	136
2090 CE	NA	51	51
2070 CE	18	38	20
1950 CE	38	38	00
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
2000 PE	67	123	56
2050 PE	13	106	93
1950 PE	33	41	08
2090 PE	NA	33	33
1900 PE	29	32	03

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 330 Crs. Our inference is - watch the 2055 support levels in the coming days. The bears have added Rs 193 Crs. That shows a tendency towards selling at the 2000 - 2050 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	943	866	77
Tisco	865	902	37
NTPC	630	678	48
SBI	540	571	31
TCS	508	576	68

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
NTPC 90 calls	31	78	47
NTPC 85 calls	29	50	21
Tisco 390 Calls	NA	45	45
Tisco 400 calls	NA	38	38
NTPC 95 calls	09	35	26

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. TCS 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 1800 - 2100 on the long side and NTPC, Reliance, SBI & 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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