The markets have consolidated on a week-on-week basis with a slump in volumes as the previous week's volumes were higher due to expiry. The outstanding net long positions are up approx 14 % on a week-on-week basis. This is a routine development on expiry. The outlook appears to be cautiously optimistic as the markets are trading below the short term resistance at the 2198 levels which points towards a possibility of  2239 levels if more buying occurs. The Nifty near month futures trade at Rs 8 discount to cash - as against at Rs 5 discount to cash last weekend. The stocks of the week are likely to remain Reliance Inds, SBI & Tisco.

Outstanding positions - week on week

Market internals - outstandings - all Rs crores

Description	Rupees crores	Call options	Put options	Net position
Index Futures	4,749 388
Stock futures	11,544 1430
Index options		926 342	1357 552	(-) 431 210
Stock options		1215 607	321 187	894 420
Total Futures	16,293 1818	Total options - net	463 210
Gross longs ( F+O )	18,434 2767	Net longs ( F+O )	16,756 2028

Observation - The net out-standings have risen approx 14 % as the above table indicates. This is a routine development on expiry. Click here to view previous weeks file.

Note - Previous weekend gross long positions Rs 15,667 crs, net long positions Rs 14,728 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 12,565 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 July 07, 2005. That indicates a selling bias in the near term. Purchases of Rs. 406 Crs are seen in the cash segment on that day.

Source - The National Stock Exchange.

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The traded volumes have slumped significantly. The traded turnover was lower in all the segments. This shows a lower retail participation. The previous weeks figures figures were higher due to expiry. 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 cautious in the short term. Click here to view previous weeks file

Description	Previous week - Rs. crores	Current - Rs. crores	Change - Rs crores
Index Futures	22,359	19,807	2,552
Stock futures	52,914	43,641	9,273
Totals - a	75,273	63,448	11,825
Index calls	2,935	2,071	864
Stock calls	3,100	2,736	364
Totals - b	6,035	4,807	1,228
Index puts	1,994	2,628	634
Stock puts	926	570	356
Totals - c	2,920	3,198	278
Grand totals ( a+b+c)	84,228	71,453	12,775

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	1.50 : 1	Previous week	1.40: 1
PCR - Stocks	0.23 : 1	Previous week	0.17 : 1
PCR - Total	0.30 : 1	Previous week	0.25 : 1

Observation - The PCR shows a tilt towards the bears as the ratios are showing a slight increase in shorts on a week-on-week basis. The Nifty PCR remaining outright bearish, the shorts have seen a small increase. The individual stocks show an increase in short positions. The reduction in shorts is below average after expiry. This ( PCR ) will be the one of the most reliable indicator of market trends. The total PCR has remained below 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
2200   CE	143	242	99
2250  CE	82	183	101
2150  CE	125	160	35
2100  CE	92	100	08
2050 AUG 25  CE	35	35	00
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
2150   PE	264	423	159
2100  PE	174	354	180
2200  PE	141	230	89
2050   PE	42	74	32
2000  PE	54	59	05

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 243 Crs - showing a preference for the 2150 - 2250 strikes. Our inference is - watch the 2198 / 2152 support levels in the coming days. The bears have increased Rs. 465 Crs. That shows a tendency towards the 2100 - 2200 strikes. The undertone appears cautiously 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	835	995	160
Tisco	810	847	37
ONGC	303	330	27
Infosys	300	364	64
SBI	533	551	18

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
NTPC 90 Calls	26	55	29
RELIANCE 640 calls	21	49	28
RELIANCE 660  calls	23	36	13
TISCO 350 calls	26	33	07
TISCO 360 calls	16	33	17

Observation - The action remains polarised around the same big counters - Tisco, Reliance & NTPC. Outstanding open interest in all the stocks has risen - a routine phenomena on expiry. 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 2100 - 2250 on the long side and NTPC, Reliance Inds, & 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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