Derivatives: Market will continue to remain cautious
F&O activity emits mixed signal with option indicating negative trend; global market activity will give cues and the market will continue to remain cautious.
The market movement remained flat during the week ended 11th December 2009 with really mixed kind of signals from the futures & options (F&O) activity all through-out the week. On Friday the Nifty corrected by 17.35 after the announcement of weaker than expected Industrial production (IIP) data. The industrial production growth though robust at 10.3% fell below market expectations of a growth of 13% to 14% for the month. For the full week though the nifty index closed 8.4 points higher at 5117.30. The average volume in the F&O segment duringthe week under review stood at Rs 63619.86 crore. Although the nifty future remained at a premium to the underlying during the start of the week, on Friday however it closed at a discount of 5.70 points to the underlying at 5111.60. On Friday however the nifty closed lower and the nifty future shed 2.78 lakh shares in open interest (OI) to take the total OI to 2.71 crore shares. For the full week under review the nifty future shed 38450 shares in OI. Some of the front-line stock futures like Reliance, ICICI Bank, DLF, SBIN, Sail and Bharti also shed OI during the week. However Tata Steel, Tata Motors, Unitech and Maruti increased OI during the week.
F&O activity emits mixed signal with option indicating negative trend; global market activity will give cues and the market will continue to remain cautious.
The market movement remained flat during the week ended 11th December 2009 with really mixed kind of signals from the futures & options (F&O) activity all through-out the week. On Friday the Nifty corrected by 17.35 after the announcement of weaker than expected Industrial production (IIP) data. The industrial production growth though robust at 10.3% fell below market expectations of a growth of 13% to 14% for the month. For the full week though the nifty index closed 8.4 points higher at 5117.30. The average volume in the F&O segment duringthe week under review stood at Rs 63619.86 crore. Although the nifty future remained at a premium to the underlying during the start of the week, on Friday however it closed at a discount of 5.70 points to the underlying at 5111.60. On Friday however the nifty closed lower and the nifty future shed 2.78 lakh shares in open interest (OI) to take the total OI to 2.71 crore shares. For the full week under review the nifty future shed 38450 shares in OI. Some of the front-line stock futures like Reliance, ICICI Bank, DLF, SBIN, Sail and Bharti also shed OI during the week. However Tata Steel, Tata Motors, Unitech and Maruti increased OI during the week.
On Friday Reliance shed 7.4 lakh shares in OI to take its total OI to 1.05 crore shares. ICICI Bank, DLF, SBIN and Sail shed 5.08 lakh shares, 4.41 lakh shares, 0.75 lakh shares and 12.74 lakhshares in OI during the week under review. The OI of these decreased to 1.22 crore shares, 1.05 crore shares, 33.75 lakh shares and 90.69 lakh shares respectively.
In the nifty option front there were negative signals as fresh call were being written from 5000 to 5400 strike as puts written at 4900 and 5000 strikes earlier were covered on Friday. There were fresh put buying of 5100 and 5200 strikes.
Overall the market wide OI on Friday stood at 183.21 crore shares, thus gaining only marginally as compared to the previous trading day, however OI increased by 14.05 crore shares as compared to the previous week. Increase in week-on-week OI was due to increased activity inStock futures and option segment whose OI increased by 6.16 crore shares and 6.26 crore shares respectively on a week-on-week basis. During Friday index futures and share futures shed OI as compared to the previous day.
OI of 5000 to 5400 call increased due to aggressive call writing at these levels. For e.g. 5100 and 5200 strike calls OI increased by 9.12 lakh share and 11.70 lakh shares respectively to take the total OI to 46.38 lakh shares and 65.93 lakh shares respectively. The 5300 strike call increased OI by nearly 4 lakh shares on Friday.
The 5100 and 5200 put witnessed addition of 3.97 lakh shares and 0.96 lakh shares respectively to take the total OI of these strikes to 38.63 lakh shares and 25 lakh shares respectively
Thus the F&O activity emits a mixed signal although the option indications are negative. Going forward the global market activity will remain the cue. The market will continue to remain cautious.
