F&O activity indicates probable strong upmove for the market from the current levels

Rollover trend was really mixed signifying uncertainty, with marginal positive bias. So there could be some positive pull back in the market in the days ahead or perhaps one can say that there is little downside for the market from these levels

S&P nifty & nifty future and Futures & Option segment volumes

After witnessing steep fall during the first half of the previous week ended 30th August 2013, the markets in India witnessed sharp gain covering more than the loss due to falling crude oil prices as concerns of a military strike in Syria abated following British parliament voting against the move. Earlier during the week, the equity market and the rupee fell as the Indian government cleared the food security bill that could have major repurcursion for the economy in general. Foreign institutional investors continued to dump the Indian equities as confidence eroded in the Indian market and the recent reform announcements by the government in the form of serious infrastructure push donot seems to enthuse the market. So despite the sharp upmove in the last two days, the macro concerns continue to linger while the threat of unilateral strike by the US on Syria in the next few days has really not gone away. During the previous week ended 30th August 2013 the benchmark nifty closed flat rising just 0.05 points at 5471.80 as compared to the end of the prvious week. In the futures and option (F&O) segment the rollover trend was really mixed signifying uncertainty, with marginal positive bias. So there could be some positive pull back in the market in the days ahead or perhaps one can say that there is little downside for the market from these levels. Rupee too is seen recovering from the current levels. Most of the economic negatives and concerns of US Fed stimulus roll back are factored in. During the week under review the nifty future of the September series added 1.25 crore shares in open interest (OI) to take its total OI to 1.73 crore shares. The Bank nifty future of the September series added 17.20 lakh shares in OI to take its total OI to 21.92 lakh shares.The OI addition was mainly on the long side. In the nifty option segment the 5500 and above strike call option of the September series added OI due to buying, while the 5500 and below strike put added OI due to writing indicating that there is support for the benchmark at this level. The average volume during the week under review was higher at Rs 266308.33 crore as compared to Rs 218817.17 crore during the previous week.

Futures and option volume breakup

The put-call ratio of index options on Friday was slightly lower at 1.04 as compared to 1.2 the previous day. The stock put-call ratio were marginally higher at 0.6 as compared to 0.56 the previous day. The market wide put-call ratio on Friday was lower at 1 as compared to 1.17 the previous trading day.

The market-wide OI on Friday stood at 163.23 crore shares, 12.49 crore shares higher than the previous trading day and 58.78 crore shares lower than the end of the previous week. Stock futures and option segment witnessed aggressive addition of OI on Friday as compared to the previous day. (See the OI break-up table)

5400. 5500 and 5550 strike call option added 3.04 lakh shares, 8.77 lakh shares and 1.48 lakh shares in OI due to aggressive buying on Friday to take its total OI to 27.99 lakh shares, 33.24 lakh shares and 1.48 lakh shares respectively. 5500, 5400 and 5300 strike put option added 16.25 lakh shares, 35.93 lakh shares and 64.36 lakh shares due to aggressive writing indicating the probable strong upmove for the market from the current levels.

Rupee is seen stabilizing at its current levels and the market may witness some pull back from its current levels. But the concerns of Fed bond buying roll back, US attack on Syria, crude price and domestic inflation continues to threaten the rupee and the market as well.