Derivatives Daily Update:23.09.2011

Derivatives Update:23.09.2011

SYMBOL	EXPIRY	OPEN	HIGH	LOW	CLOSE	CHG
NIFTY	29/09/2011	4879	4935	4818.6	4870.7	-43.2
BANK NIFTY	29/09/2011	9444.9	9537.9	9262.25	9373.3	-121.1

On price charts, nifty september futures took the clue from global markets and opened lower at 4879 went down to 4818.60, bounced back to 4935 and finally closed at 4818.60 down by 43.2 points. Bank nifty too followed the trend and closed at 9373.30 down by 121.10 points.

SYMBOL	EXPIRY	OPEN INT	CHG IN OI	TR QTY	CONT	TRADES
NIFTY	29/09/2011	23704200	-318550	1731600	34632	16095
NIFTY	25/10/2011	5518900	756400	1520850	30417	11199
NIFTY	24/11/2011	611000	44450	55550	1111	450

On volume charts, traded quantity, no. of contracts as well as no of trades were substantially higher than yesterday, Open interest for september futures was lower by 318550 shares while for october futures it was up by 756400 shares. No significant observation can be made except some unwinding in september futures might have taken place.

On technical analysis front, we saw continuation of downward trend. As said in yesterday's post, Nifty in its downward journey will break 4893 (61.8% retracement of 4900-5175) and 4819 (200WMA). Today we saw Nifty broke 4893 and exactly touched 4819. We are still in a strong downward trending market and in coming days nifty will again attempt to break 4819 and will try to touch 4718, its recent low. No immediate indication of trend reversal is visible so far. All traditional indicators like RSI, Stochastics, MACD have again turned weak indicating further weakness. Nifty has created one more gap of 5141-5010 which will again act as resistance zone besides gap 0f 5337-5191. As can be observed from this price movements, there are many headwinds which nifty has to clear for any meaningful break out. Any pull backs are the best opportunities to short the market. For those who want to venture a contra trade,though not advisable in my opinion, can buy nifty with strict stop at 4819 and 4718.

On stock futures front, top traded counters were State Bank, Reliance, ICICI Bank, Tata Steel and Tat Motors. Top gainers were Deccan Chronicle 5% Opto Circuits 4% Patni Computers 4% Mphasis 3% Rpower 3%. Top losers were Jain Irrigation -8% Chambal Ferti -7% NMDC -6% ABB -6% and Tata Motors -5%.

On stock options front, State Bank 1900 PE, 1950 CE, 2000 CE, Reliance 780 CE, 800 CE, and 780 PE were highly active contracts. Significant increase in Open Interest was seen in 4700 CE(562350) 4800 CE (1531350) 5000 CE (1183500) 5100 CE (681200) 4500 PE (448100) 4600 PE (2696100) while significant decrease in Open Interest was seen in 5300 CE (-1247300) 4700 PE (-870500) 4900 PE (-553000) 5000 PE (-403800) 5100 PE (-565300) 5200 PE (-720650)

To conclude, analysis of price movements and volumes leads me to believe that we are in a downward trending market. Every pullback of price to resistance zone is met with strong supply, not allowing nifty to clear those zones and all so called support zones are visited and breached. In such scenario it is advisable to trade short till any meaningful breakout happens. Volatility is high, expiry is near so trade with care my dear.

Happy Trading

Atul Doshi