Anand Rathi - Daily Strategist - May 11 2007

The NIFTY futures saw a rise in OI to the tune 2.93% with prices coming down from high and closing near day's low indicating short positions being built up aggressively in the market at higher levels which forced bulls to liquidate their positions .The premium in nifty futures narrowed and nifty futures closed at 22 points discount to spot nifty indicating aggressive long liquidation seen in the market and fresh short positions built up in the market . The FII bought index futures to the tune of 82crs and buyers in index options to the tune of 103crs. The PCR has come up from 1.12 to 1.14 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 10.03% rise in OI with prices coming down sharply and closing near day's low indicating heavy short positions being built up in the counter indicating weakness in the counter. Whereas RELIANCE saw 0.55% rise in OI with prices coming down from high indicating selling pressure again emerging in this counter which may further weaken 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 saw significant rise in OI with prices coming down indicating selling pressure emerging and short positions built up in these counters indicating some weakness may be seen in these counters .SATYAMCOMP saw drop in OI with prices almost flat indicating buying emerging in this counter at lower levels .WIPRO saw addition in OI with prices coming down indicating selling pressure coming in this counter suggesting some weakness may be seen in this counter.

In the BANKING counters, all the majors saw rise in OI significantly with prices coming down from high indicating this sector also saw selling pressure emerging at higher levels thus may result in sharp movement on either side in these counters .SBIN saw 3.61% with prices closing almost flat indicating short positions built up at higher levels. ICICIBANK saw rise in OI 3.48 % with prices coming down indicating weakness in this counter .HDFCBANK saw rise in OI with prices up indicating strength in the counter.

In the metal pack TATASTEEL saw drop in OI to the tune of 6.86% with price coming down from high indicating long positions liquidated in the counter as market reacted form higher levels. SAIL saw liquidation of long positions as counter saw drop in OI with fall in prices .HINDALCO saw drop in OI with prices coming down indicating liquidation of long positions STER saw rise in OI with prices going up indicating huge buying seen in the counter indicating further 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 11 2007