Anand Rathi - Daily Strategist - May 18 2007

The NIFTY futures saw a drop in OI to the -4.12% with prices went up sharply but came down at the end of the day as 5t went to all time high which led into profit booking by long positions and built up of short positions .Market managed to remain above the 4200 levels which may give support to the market. Nifty futures premium came down from 25 to 1 point indicating liquidation of long positions aggressively. The FII buyers index futures to the tune of 1100crs and buyers in index options to the tune of 370crs. The PCR has come up from 1.21 to 1.43 indicates some buying may emerge at lower levels in the market. The IV is around 25.43 levels indicating some volatile trading sessions ahead.

Among the Big guns, ONGC saw 1.05% rise in OI with prices remaining in a range indicating that both bulls and bears were aggressive in the counter suggesting that the counter may show sharp movement on either side in coming days. Whereas RELIANCE saw 3.74% 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 saw rise in OI with prices recovering from lows indicating some buying emerging in this counter suggesting that the strength may be seen in the counter. SATYAMCOMP saw rise in OI with prices coming down marginally indicating that both bulls and bears were aggressive in the counter. TCS saw drop in OI with prices up indicating short covering seen in the counter but to show real strength it need to add further built up in positions.

In the BANKING counters, all the majors saw buying with OI going either up or down indicating we saw short covering as well long positions built up in the BANKING counters. SBIN saw 1.50% rise in OI with prices closing on higher side indicating long positions being built up in the counter suggesting strength but one should book profits in the counter on further rise. ICICIBANK saw drop in OI with prices up indicating long positions built up 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 rise in OI with prices coming down from high and closing near day's low indicating short positions being built up in the counter suggesting weakness may be seen in the counter. SAIL saw drop in OI with prices coming down indicating long positions being liquidated in the counter. HINDALCO & NALCO saw drop in OI with prices down indicating long positions being liquidated in the counter. STER saw drop 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 some profit booking as market is near all time high so one should not take aggressive long positions . Market may show further strength and we may see fresh buying emerging in the market if market sustains above 4240 levels One should trade with strict stop losses to be adhered too.

Anand Rathi - Daily Strategist - May 18 2007