The NIFTY futures saw a rise in OI to the tune 1.02% with prices coming down and closing below 4100 levels near day's low indicating short positions were built up in the market as market not sustaining at higher levels .The discount in nifty futures widened and nifty futures closed at 21 points discount to spot nifty indicating aggressive short positions built up and profit booking emerging in the market at the current levels. The FII sold index futures to the tune of 77crs and sellers in index options to the tune of 15crs. The PCR has come down from 1.19 to 1.17 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 1.50% rise in OI with prices coming down 1.23% indicating shorts built up their positions and long positions liquidated in the counter indicating weakness in the counter. Whereas RELIANCE saw 2.23% rise in OI with prices coming down from high indicating selling pressure emerging at higher levels and drop in prices was mainly driven by short selling coming in the counter and which may be expected to remain continue for few days.
In the TECH front, INOFSYSTCH& TCS, WIPRO & SATYAMCOMP saw rise in OI with prices coming down sharply indicating fresh short positions being built up in overall IT pack indicating some weakness may be seen in IT pack. TCS saw some buying emerging at lower levels indicating that the counter may outperform the overall IT pack in the short term.
In the BANKING counters, SBIN saw rise OI to the tune of 5.37% with prices coming down sharply and closing near day's low indicating fresh short positions being built up in the counter indicating weakness in the counter. ICICIBANK saw rise in OI with fall in prices indicating short positions being built up in this counter indicating weakness in the counter. HDFCBANK saw rise in OI with drop in prices indicating liquidation of long positions and built up of fresh short positions in the counter.
In the metal pack TATASTEEL saw drop in OI to the tune of 8.89% with price down to the tune of 0.30% indicating liquidation of long positions in the counter suggesting weakness may be seen in this counter. SAIL saw drop in OI with prices almost flat indicating liquidation of positions. HINDALCO saw rise in OI with fall in prices indicating weakness in the counter. STER saw liquidation of positions with prices positive indicating buying emerging at lower levels indicating some 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 4050 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 Note - May 9 2007