The markets have risen over 3 % on a week-on-week basis on high volumes growth as the operators seem to have squared off short positions at higher levels. The Outstanding net long positions are down approximately 15 % on a week-on-week basis. This is a routine development as the OI has decreased after expiry. The outlook appears to be optimistic as the markets are above a short term resistance at the 1769 levels which if violated on a continous close basis, will see 1738 levels. The Nifty futures trade at Re 3 premium to cash. The stocks of the week are likely to be Reliance, TCS & Tisco.

Outstanding positions - week on week

Market internals - outstandings - all Rs crores

Description	Rupees crores	Call options	Put options	Net position
Index Futures	1,812 299
Stock futures	5,588 72
Index options		383 341	317 657	66  311
Stock options		649 842	177 564	472  278
Total Futures	7,400 371	Total options - net	538 33
Gross longs ( F+O )	8,432 1554	Net longs ( F+ O )	7,938 333

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

Note - Previous weekend gross long positions Rs 9,986 crs, net long positions Rs 8,271 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 4,694 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 Sept 30, 2004. That indicates selling in the near term. Purchases of Rs 416 crs are seen in the cash segment on that day.

Source - The National Stock Exchange.

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The traded volumes have jumped - a bullish sign as the markets have risen on higher volumes. The traded turnover was higher in all the segments. 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	14,031	15,608	1,577
Stock futures	28,643	32,250	3,607
Totals - a	42,674	47,858	5,184
Index calls	1,104	1,610	506
Stock calls	2,924	2,971	47
Totals - b	4,028	4,581	553
Index puts	822	997	175
Stock puts	817	949	132
Totals - c	1,639	1,946	307
Grand totals ( a+b+c)	48,341	54,385	6,044

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	0.84 : 1	Previous week	1.37: 1
PCR - Stocks	0.25 : 1	Previous week	0.49 : 1
PCR - Total	0.30 : 1	Previous week	0.56 : 1

Observation - The PCR shows a tilt towards the bulls as the ratios are showing bearish activity building receeding on a week-on-week basis. The Nifty PCR though remaining outright bearish, the shorts have risen slower than the longs. The bears have covered a small portion of their outstanding positions ahead of expiry This ( PCR ) will be the one of the most reliable indicator of market trends. The total PCR has turned positive. 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
1650 CE	97	32	65
1730 CE	41	36	05
1700 CE	55	86	31
1770 CE	09	75	66
1750 CE	72	83	11
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
1770 PE	02	32	30
1750 PE	28	50	22
1650 PE	92	49	43
1700 PE	70	102	32
1730 PE	44	22	22

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 38 Crs. Our inference is - watch the 1738 support levels in the coming days. The bears have added Rs 19 Crs. That shows a tendency towards building up shorts at the 1700 - 1770 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.

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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	467	652	185
TCS	499	534	35
Reliance	331	372	41
Maruti	319	320	01
SBI	323	281	42

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
Infosys 1710 calls	31	20	11
TCS 1040 calls	36	30	06
Tisco 280 Calls	23	21	02
Tisco 290 calls	35	34	01
Tisco 300 calls	21	37	16

Observation - The action remains polarised around the same big counters - Tisco, Reliance, SBI & Telco. Outstanding open interest in most of the stocks has fallen - a routine phenomena before expiry. Watch 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 1700 - 1750 on the long side and Satyam Computers, Tata Motors, Reliance & Tisco in individual stocks.

 

Source - The National Stock Exchange.

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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.

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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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