Derivatives Daily Update: February 15, 2012

Bull Ride Continues: February 15, 2012

Nifty February Futures smartly closed at 5552.55 up by 112.20 points. Bank Nifty closed at 10971.25 up by 382.10 points. Volumes were hugely higher than yesterday both on Futures and Options segment of the market, more so on Options segment. There was huge built up in long positions as Open Interest in Nifty across all the series was up by 15 lakh shares and stood at 2.99 Cr shares. Bank Nifty saw short covering as its Open Interest came down by 3.40 lakh shares. Put Call Ratio was smartly up to 1.22 from 1.13 levels of yesterday, indicating strength and confidence among the market participants. Volatility as measured by India VIX was down by 3% and closed at 22.10 again indicating stability in market. Dollar Rupee pair was trading lower by few notch at 49.37. All in all it was a brilliant day for Bulls and Bulls responded the same by mopping up positions.

My prognosis that we are heading for 5650 is strongly vindicated today. If we assume that we are in bear trend which started from 6349 and temporarily stopped at 4538 and we take maximum Fibonacci retracement level of 61.8 %, it comes at 5650. So this level of 5650 is a sacrosanct level which in a way will decide whether bear trend has ended or it will once again resume. To put it very simply, if we are not able to decisively trade above 5650 levels for few days, there is possibility that bear trend will resume. Alternatively if we assume that we are in a secular bull trend which started from 2238 and stopped at 6349 and we take another important Fibonacci retracement level of 50% it comes around 4450 level which we almost touched some few days back, meaning thereby that we are still in bull market and the likely correction has happened and bull trend has again resumed. So coming few days will decide the secular trend and accordingly we might witness new high or alternatively new low in calendar year 2012.

Top five individual stocks which gained today were VOLTAS 25%, GTOFFSORE 20%, ADANIPOWER 17%, 3IINFOTECH 14% and INDIACEM 13%.

Top five individual stocks which lost ground were EDUCOMP -5%, ALOKTEXT -4%, TTKPRESTIG -3%, MERCATOR -3% and SOUTHBANK -2%.

Top five individual stocks which attracted higher volumes were TATAMOTORS, SBIN, ICICIBANK, AXISBANK and TATASTEEL.

Top five individual options which attracted higher activity today were SBIN 2300 CE, SBIN 2200 CE, TATAMOTORS 290 CE, SBIN 2250 CE and SBIN 2200 PE.

Nifty option series where POSITIVE change in open interest was seen were 5600 CE (11.58 LK) 5700 CE 917.65 LK) 5800 CE (2.42 LK) 5300 PE (2.34 LK) 5400 PE (7.79 LK) 5500 PE (33 LK) 5600 PE (14.88 LK) 5700 PE (1.06 LK)

Nifty option series where NEGATIVE change in open interest was seen were 5200 CE (5.57 LK) 5300 CE (7.30 LK) 5400 CE (13.70 LK) 5500 CE (19.95 LK) 4700 PE (1.96 PE (1.96 LK) 4900 PE (2.63 LK) 5000 PE (2.63 LK) 5100 PE (9.43 LK) 5200 PE (1.64 LK)

Outstanding open interest in Out of the Money Call Options stood at 1.27 Cr shares and that of Put Options stood at 5.89 Cr shares. Outstanding open interest in In the Money Call Options stood at 1.77 Cr shares and that of Put Options stood at 26.66 Lk shares.

Happy Trading

Atul Doshi