Derivatives rollover to dictate trend

The near term trend on the domestic bourses will be determined by the extent of rollover in the derivatives segment. At end of Tuesday (27 November 2007)’s trade, about 51% of open positions in Nifty futures were rolled over to December 2007 contracts from November 2007 contracts. November 2007 derivatives contracts expire on Thursday, 29 November 2007. Overall rollover in the futures & options segment was, however, low at 42% to 45%, till Tuesday.

Asian stock markets were mixed on Wednesday, 28 November 2007, with a confidence-boosting $7.5 billion capital injection for Citigroup offset by a fall in resource shares as commodity prices slid. On Tuesday, Abu Dhabi Investment Authority said it was buying a 4.9% stake in Citigroup, which is wrestling with the fallout from the US subprime mortgage crisis.

Key benchmark indices in Hong Kong, Japan, and Taiwan were down by between 0.24% to 0.69%. Key benchmark indices in China, South Korea and Singapore were up by between 0.07% to 0.48%.

US stocks rose on Tuesday, 27 November 2007, after Abu Dhabi's $7.5 billion purchase of a stake in Citigroup Inc spurred a rebound in financial stocks and a drop in oil prices boosted shares of big manufacturers. The Dow Jones industrial average was up 215 points, or 1.69%, at 12,958.44. The Standard & Poor's 500 Index was up 21.01 points, or 1.49% at 1,428.23. The Nasdaq Composite Index was up 39.81 points, or 1.57%, at 2,580.80.

Oil steadied after falling more than 3% on Tuesday, 27 November 2007, on expectations that OPEC will boost supply and amid concerns that US economic problems will crimp demand growth. US crude was trading at about $94.60 a barrel, well off the recent peak of $99.29.

Foreign institutional investors (FIIs) were net sellers to the tune of Rs 465 crore in the futures & options segment on Tuesday, 27 November 2007. According to data released by the NSE, FIIs were net sellers of index futures to the tune of Rs 11.84 crore and bought index options worth Rs 75.36 crore. They were net sellers of stock futures to the tune of Rs 529.05 crore and bought stock options worth Rs 0.54 crore.

In the cash market, FIIs sold shares worth a net Rs 498.35 crore on Tuesday. Domestic institutions bought shares worth a net Rs 298.33 crore on Tuesday.

The market has been volatile over the past few days due to alternate bouts of buying and selling amid FII sales caused by redemption pressure in their home countries and fears of a US recession arising from housing slump and credit crisis.

FII outflow in November 2007, till 26 November 2007, reached Rs 4158.60 crore. FIIs had made heavy purchases in September 2007 and October 2007. FIIs had bought shares worth a net Rs 16132.60 crore in September 2007 and Rs 20590.90 crore in October 2007.