Anand Rathi - Daily Strategist - May 17 2007

The NIFTY futures saw a drop in OI to the 4.05% with prices went up sharply and closed near day's high indicating aggressive short covering seen in the nifty futures and fresh long positions built up in the market .Market managed to cross the resistance of 4150 levels with good trading volumes which may help market to up further. Nifty futures closed at 25 points premium to spot nifty suggesting fresh buying coming in nifty at lower levels and shorts covering their positions. The FII buyers index futures to the tune of 408crs and buyers in index options to the tune of 1.76crs. The PCR has come up from 1.19to 1.121 indicates some buying may emerge at lower levels in the market. The IV is around 24.80 levels indicating some volatile trading sessions ahead.

Among the Big guns, ONGC saw 2.40% drop in OI with prices closing in blue indicating buying emerging in the counter suggesting some more addition in the OI may be seen in the counter with positive bias. Whereas RELIANCE saw 0.31% drops in OI with prices moved up sharply and closed near day's high and thereby helping the overall market to gain further momentum. The built up suggests that the overall rise in the price was mainly driven by short covering.

In the TECH front, INOFSYSTCH, TCS & SATYAMCOMP saw rise in OI with prices recovering from lows indicating some buying emerging in these counters as market recovered forcing weak short positions to cover their positions aggressively indicating some buying support may emerge in these counters.

In the BANKING counters, all the majors saw buying with OI either going up or down indicating we saw short covering as well long positions built up in the BANKING counters .SBIN saw 2.09% drop in OI with prices closing on higher side indicating shorts covering their positions as it rallied on higher side & fresh money coming in the counter and fresh long positions built up suggesting further strength in the counter. .ICICIBANK saw drop in OI with prices up indicating short covering seen in the counter suggesting further strength in the counter. .HDFCBANK saw rise in OI with prices up indicating long positions built up in the counter indicating strength in the counter.

In the metal pack TATASTEEL saw drop in OI with prices almost flat indicating that both bulls were liquidating their positions in the counter. SAIL saw rise in OI with prices coming up indicating long positions being built up in the counter indicating further strength may be seen in the counter. HINDALCO & NALCO saw drop in OI with prices up indicating long positions being built up in these counters as well as shorts covering their positions indicating strength in these counters. STER saw rise in OI with prices coming down indicating selling pressure emerging in this counter suggesting weakness may be seen in the counter.

We feel that the volume and built up in OI suggests that market may show strength as it crossed the resistance of 4150 levels and forced bears to cover their positions . Market may show further strength and we may see fresh buying emerging in the market. One should trade with strict stop losses to be adhered too.

Anand Rathi - Daily Strategist - May 17 2007