The markets have risen approximately 1.4 % on a week-on-week basis on poor volumes growth as the players seem to have abstained from large scale buying commitments. The festive season was also a major reason for a drop in volumes. The Outstanding net long positions are up approximately 12 % on a week-on-week basis. This is a positive development as bulls have enhanced their positions. The outlook appears to be optimistic as the markets are above a short term support at the 1866 levels which if not violated during the week,  will see 1890 - 1895 levels. The Nifty futures trade at Rs 5 premium to cash. The stocks of the week are likely to be NTPC, Reliance Inds, TCS & Tisco.

Outstanding positions - week on week

Market internals - outstandings - all Rs crores

Description	Rupees crores	Call options	Put options	Net position
Index Futures	2,083 146
Stock futures	7,543 931
Index options		775 229	892 421	(-) 117  192
Stock options		1521 614	556 279	965  335
Total Futures	9,626 1077	Total options - net	848 143
Gross longs ( F+O )	11,922 1920	Net longs ( F+O )	10,474 1220

Observation - The net out-standings have increased as the above table indicates. This is a positive development. Click here to view previous weeks file

Note - Previous weekend gross long positions Rs 10,002 crs, net long positions Rs 9,254 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 6,290 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 Nov 11, 2004. That indicates a buying bias in the near term. Purchases of Rs 167 crs are seen in the cash segment on that day.

`Source - The National Stock Exchange.

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The traded volumes have slumped. The traded turnover was lower in all the segments. That is a sign of concern as the rally was on poor volumes growth. 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	9,132	6,379	2,753
Stock futures	23,505	19,301	4,204
Totals - a	32,637	25,680	6,957
Index calls	1,177	824	353
Stock calls	2,488	2,204	284
Totals - b	3,665	3,028	637
Index puts	983	624	359
Stock puts	653	602	51
Totals - c	1,636	1,226	410
Grand totals ( a+b+c)	37,938	29,934	8,004

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	1.17 : 1	Previous week	0.88: 1
PCR - Stocks	0.32 : 1	Previous week	0.27 : 1
PCR - Total	0.37 : 1	Previous week	0.33 : 1

Observation - The PCR shows a tilt towards the bears as the ratios are showing degeneration on a week-on-week basis. The Nifty PCR remaining outright bearish, the shorts have risen faster than the longs. The individual stocks show a marginal increase in short  positions. 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
1800 CE	223	217	06
1840 CE	147	127	20
1870 CE	00	50	50
1860 CE	38	59	21
1880 CE	00	50	50
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
1840 PE	82	80	02
1750 PE	146	146	00
1850 PE	14	53	39
1700 PE	42	42	00
1800 PE	255	251	04

Observation - The index contracts show which way the players are tilting. The outstanding positions seem to have increased all round in the previous week. The bulls have added Rs 95 Crs. Our inference is - watch the 1850 support levels in the coming days. The bears have added Rs 33 Crs. That shows a tendency towards building up shorts at the 1850 strike price. The undertone appears optimistic for now. Click here to view previous weeks file.

Source - The National Stock Exchange.

Open interest I FII positions I Volumes I PCR I Nifty puts / calls I open int changes I OI - stocks I Top calls / puts I Volatility I Recos I Print this page I Close Window

Source - The National Stock Exchange.

Open interest I FII positions I Volumes I PCR I Nifty puts / calls I open int changes I OI - stocks I Top calls / puts I Volatility I Recos I Print this page I Close Window

The center stage - week on week

5 Highest outstanding scrips

Futures	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
Tisco	834	866	32
TCS	457	476	19
Reliance	638	763	125
Infosys	334	433	99
SBI	355	362	07

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
NTPC 80 calls	22	59	37
NTPC 75 calls	25	45	20
Reliance 560 Calls	43	61	18
Tcs 1200 calls	36	48	12
Tisco 300 calls	66	60	06

Observation - The action remains polarised around the same big counters - Tisco, Reliance, TCS & SBI. Outstanding open interest in most of the stocks has risen - a positive phenomena after 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 1850 - 1880 on the long side and Satyam Computers, Reliance & Tisco in individual stocks.

 

Source - The National Stock Exchange.

Open interest I FII positions I Volumes I PCR I Nifty puts / calls I open int changes I OI - stocks I Top calls / puts I Volatility I Recos I Print this page I Close Window

Volatility is a F&O traders best friend. We have split the volatility readings of the stocks in two segments - above the market average and below the market average. It is obvious that higher than average volatility will see a larger move in either direction and therefore benefit a savvy intraday / short term trader. Please note how the volatility has fallen sharply across the board since the last 4 months. It will have an impact on the margins payable by futures traders. It is wiser to avoid those stocks which show lower volatility readings if you want short term profits. Keep watching this space for regular updates.

Observation - Our investors are advised to watch the above highly volatile counters for signs of a bounce-back. However, other factors too need to be taken into account before a fresh trade is initiated.

The index heavy-weights are showing lower volatility than the broader markets, which shows that the action is likely to be polarised around "side counters". The software heavy-weights are relatively higher volatile than the old economy counters. Technology stocks are likely to remain in the focus of the trading pattern.

 

Indices - volatility

 

Underlying Underlying Volatility Underlying Ann. Volatility Applicable Volatility Applicable Ann. Volatility CNXIT 1.25 23.91 1.25 23.91 NIFTY 0.83 15.89 0.87 16.68 Aggregates 1.04 19.90 1.06 20.29

The index implied volatility is on the descent which shows a the markets are moving higher with relative ease.

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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