The markets have rallied on a week-on-week basis on higher volumes growth as the players seem to have rolled over significant open contracts to the December series. The Outstanding net long positions are down approximately 15 % on a week-on-week basis. This is a positive development as bulls have rolled over majority of their positions. The outlook appears to be cautiously optimistic as the markets are likely to have a Reliance overhang in the coming week. The Nifty is trading above a short term support at the 1884 levels which if violated during the week,  will see 1860 - 1865 levels. The Nifty December futures trade at Rs 5 discount 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	1,715 375
Stock futures	7,021 703
Index options		374 535	394 684	(-) 20  149
Stock options		701 973	136 564	565  409
Total Futures	8,736 1078	Total options - net	545 260
Gross longs ( F+O )	9,811 2586	Net longs ( F+O )	9,281 1338

Observation - The net out-standings have decreased as the above table indicates. This is a positive development as outstanding positions have not shrunk as much as they have in the recent times after expiry. Click here to view previous weeks file

Note - Previous weekend gross long positions Rs 12,397 crs, net long positions Rs 10,619 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 7,834 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 Nov 24, 2004. That indicates a selling bias in the near term. Purchases of Rs 279 Crs are seen in the cash segment on that day.

Source - The National Stock Exchange.

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The traded volumes have improved. The traded turnover was higher in all the segments. That is a positive sign as the markets are rising on higher volumes. It maybe noted however, that roll over means higher volumes as positions are squared in the near month and created in the mid month series. 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 cautiously 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	7,226	11,519	4,293
Stock futures	22,965	33,970	11,005
Totals - a	30,191	45,489	15,298
Index calls	1,114	1,290	176
Stock calls	2,749	3,142	393
Totals - b	3,863	4,432	569
Index puts	757	898	141
Stock puts	795	844	49
Totals - c	1,552	1,742	190
Grand totals ( a+b+c)	35,606	51,663	16,057

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	1.07 : 1	Previous week	1.21: 1
PCR - Stocks	0.18 : 1	Previous week	0.37 : 1
PCR - Total	0.23 : 1	Previous week	0.42 : 1

Observation - The PCR shows a tilt towards the bulls as the ratios are showing slight improvement on a week-on-week basis. Bears have pared exposure on their positions. The Nifty PCR remaining outright bearish, the shorts have seen paring on expiry. The individual stocks show increase in long 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	155	25	130
1900 CE	55	144	89
1890 CE	83	25	58
1880 CE	77	24	53
1910 CE	05	65	60
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
1800 PE	258	38	220
1900 PE	24	119	95
1920 PE	25	25	00
1850 PE	60	109	49
1890 PE	12	24	12

Observation - The index contracts show which way the players are tilting. The outstanding positions seem to have decreased in the previous week. This is routine on expiry. The bulls have cut Rs 92 Crs. Our inference is - watch the 1880 support levels in the coming days. The bears have cut Rs 64 Crs. That shows a tendency towards squaring up shorts at the 1800 strike price and selling at the 1850 - 1900 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
Tisco	839	804	35
TCS	488	434	54
Reliance	768	597	171
NTPC	300	418	118
SBI	386	354	32

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
NTPC 80 calls	56	52	04
NTPC 75 calls	53	35	18
Reliance 520 Calls	05	32	27
Reliance 540 calls	63	29	34
TCS 1260 calls	04	30	26

Observation - The action remains polarised around the same big counters - Tisco, Reliance, TCS & SBI. Outstanding open interest in most of the stocks has fallen - a routine phenomena before expiry. NTPC 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 - 1900 on the long side and Satyam Computers, Reliance, 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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