Anand Rathi - Daily Strategist - May 10 2007

The NIFTY futures saw a rise in OI to the tune 4.74% with prices coming up from lows and closing near day's high indicating long positions being built up aggressively in the market at lower levels which forced bears to cover their positions .The discount in nifty futures narrowed and nifty futures closed at 19 points premium to spot nifty indicating aggressive short covering seen in the market and fresh long positions built up in the market . The FII sold index futures to the tune of 602crs and sellers in index options to the tune of 48crs. The PCR has come up from 1.17 to 1.12 indicates some weakness may be seen in the market. The IV is around 25.40 levels indicating some volatile trading sessions ahead.

Among the Big guns, ONGC saw 1.63% rise in OI with prices almost flat indicating that the counter may remain in a range before taking any sharp movement on either side. Whereas RELIANCE saw 4.19% rise in OI with prices coming up from low indicating buying spree emerging at lower levels and rise in prices was mainly driven by fresh long positions built up in the counter. The counter may see further built up of positions before taking any sharp and directional move which in turn may help to get clue about market's direction.

In the TECH front, INOFSYSTCH& TCS & SATYAMCOMP saw significant rise in OI with prices coming down though market went up indicating selling pressure emerging which in turns indicating lack of confidence in the IT pack on positive side .The only exception was WIPRO which saw shorts covering their positions and the counter closing near day's high indicating buying emerging at lower levels in this counter indicating strength in this counter.

In the BANKING counters, all the majors saw rise in OI significantly with gain in values indicating buying emerging in this pack and shorts covering their positions which in turn may help these counters to rise. SBIN saw rise OI to the tune of 6.72% with prices coming up sharply and closing near day's high indicating fresh long positions being built up in the counter indicating strength in the counter .ICICIBANK saw rise in OI to the tune of 7.08% with rise in prices indicating long positions being built up in this counter indicating strength in the counter.

In the metal pack TATASTEEL saw rise in OI to the tune of 5.08% with price up to the tune of 2.49% indicating built up of long positions in this counter and short covering their positions aggressively suggesting strength in this counter .SAIL saw rise in OI with prices almost flat indicating uncertainty may prevail in this counter. HINDALCO saw marginal drop in OI with prices almost flat indicating lack of activity in the counter .STER saw drop of positions with prices positive indicating buying emerging in this counter indicating strength in the counter.

We feel that the volume and built up in OI suggests that market may show some short positions being built up and long positions liquidation as uncertainty prevail in the market .Market may show weakness if it closes below 4025 levels where we may see fresh short positions built up in the market and long liquidation in the market .One should trade with strict stop losses to be adhered too.

Anand Rathi - Daily Strategist - May 10 2007