The markets have fallen approximately 0.8 % on a week-on-week basis on lower volumes growth as the players seem to have abstained from buying. The Outstanding net long positions are up approximately 3 % on a week-on-week basis. This is a positive development as the OI has increased in the futures segment which shows a higher risk appetite amongst the traders. The outlook appears to be cautious as the markets are below a short term support at the 1802 levels which if not surpassed during the week,  will see 1755 - 1760 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	2,087 24
Stock futures	6,908 200
Index options		748 113	890 137	(-) 142  24
Stock options		1823 215	533 48	1290  167
Total Futures	8,995 552	Total options - net	1,148 143
Gross longs ( F+O )	11,566 407	Net longs ( F+O )	10,143 367

Observation - The net out-standings have increased as the above table indicates. This is a positive development as the increase is in the futures segment - showing a higher risk appetite. Click here to view previous weeks file

Note - Previous weekend gross long positions Rs 11,014 crs, net long positions Rs 9,776 crs.

Source - The National Stock Exchange.

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It maybe noted that FII's now hold approximately Rs 6,025 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 marginally more futures than they have bought on Oct 20, 2004. That indicates a selling bias in the near term. Sales of Rs 13 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 almost 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	9,435	8,755	680
Stock futures	20,730	18,685	2,045
Totals - a	30,165	27,440	2,725
Index calls	843	909	66
Stock calls	2,465	2,114	351
Totals - b	3,308	3,023	285
Index puts	651	678	27
Stock puts	634	617	17
Totals - c	1,285	1,295	10
Grand totals ( a+b+c)	34,758	31,758	3,000

Source - The National Stock Exchange.

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Nuts and bolts - week on week

Put call ratios

 

PCR - Index	1.21 : 1	Previous week	1.20: 1
PCR - Stocks	0.27 : 1	Previous week	0.28 : 1
PCR - Total	0.33 : 1	Previous week	0.33 : 1

Observation - The PCR shows an even balance between the bulls and bears as the ratios are showing stagnation 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 long positions. This ( PCR ) will be the one of the most reliable indicator of market trends. The total PCR has remained 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
1800 CE	160	192	32
1830 CE	77	71	06
1700 CE	63	60	03
1770 CE	58	59	01
1750 CE	68	57	11
Puts	Previous week Rs Crs	Current Rs crores	Change Rs Crs
1770 PE	109	123	14
1750 PE	141	137	04
1650 PE	49	48	01
1700 PE	105	94	11
1800 PE	193	194	01

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 13 Crs. Our inference is - watch the 1760 support levels in the coming days. The bears have reduced Rs 1 Crs. That shows a tendency towards building up shorts at the 1770 - 1800 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	708	744	36
TCS	564	504	60
Reliance	373	449	76
Infosys	323	395	72
SBI	359	353	06

Options	Previous week Rs Crs	Current Rs. Crores	Change Rs Crs
Tcs 1140 calls	44	52	08
Satyam 400 calls	27	47	20
Reliance 560 Calls	41	48	07
Tisco 290 calls	52	58	06
Tisco 300 calls	85	87	02

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. 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 - 1830 on the long side and Satyam Computers, 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.

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 Futures Volatility Futures Ann. Volatility CNXIT 1.51 28.86 1.4 26.83 NIFTY 0.93 17.8 0.96 18.28   1.22 23.33 1.18 22.55

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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