Volatile trading days with rather flat range to continue for some time

Cautious outlook is visible from the trend in the F&O segment; Global market trend continues to be crucial,
the range seems to remain flat with downward bias and extreme volatility



The global market mood continued to dictate the Indian market trend as the domestic market recovered from the steep correction it encountered during the beginning of the week although it closed at a marginal correction of 16.15 (S&P Nifty) during the week ended 11th June 2010 at 5119.35. Impressive industrial production data that was released on Friday and the prospects of strong monsoon forecast helped the domestic benchmark S&P Nifty cut back its losses during the latter part of the week. Industrial output rose much faster than expected at 17.6% in April 2010 from a year earlier on strong consumer demand and government spending. Manufacturing output rose 19.4% in April 2010. The industrial output rose 10.4% in the 2009/10 fiscal year (April-March), faster than the 2.6% clocked in the previous fiscal year.

The nifty June future traded at a discount all throughout the week although the discount narrowed to just 2.5 points on Friday. On Friday nifty rose 40.75 points. Despite the prevailing strong underlying optimism in the domestic market, uncertainty pertaining to the global market health continued to cloud the domestic market. Thus the market would continue to exhibit the kind of volatility it is exhibiting right now for some more time with the range more or less remaining flat with down ward bias. As is evident from the trend in the futures & option (F&O) segment there were still short build-up in the nifty and the stock future during the beginning of the week although some of those open interest (OI) were shed during the latter part. Overall for the week under review, the total OI addition in nifty June series stood at 23.07 lakh and the total OI of the nifty June series increased to 3.03 crore shares. On Friday the nifty June shed 6.27 lakh shares in OI. Some of the liquid stock future counters also witnessed similar trends, although in the nifty option front there was some bold put writing at the 5000, 5100 and 5200 strikes.

During the week gone by Reliance June future added 11.42 lakh shares in OI, while Tata Steel and ICICI Bank June future added 6.99 lakh shares and 17.20 lakh shares in OI. Tata Motors June series shed 2.24 lakh shares in OI, while Unitech added 72.45 lakh shares in OI.

The 4900 to 5200 strikes were the most active in both the nifty puts as well as the calls during the week ended 11th June 2010. The nifty 5000, 5100 and 5200 strike call added 10.32 lakh shares, 6.82 lakh shares and 8.85 lakh shares in OI during the week mainly due to call writing. The total OI in these strikes stood at 42.07 lakh shares, 60.46 lakh shares and 70.58 lakh shares respectively. However there witnessed some bold put writing at 5000 to 5200 strike puts on Friday. All the above-mentioned strikes added 8.98 lakh shares, 5.67 lakh shares and 5.28 lakh shares in OI on Friday

The going ahead seems to be uncertain as the cautious outlook is visible from the trend in the F&O segment. Although the global market trend still continues to be crucial, the range seems to remain flat with downward bias and extreme volatility.