Derivatives Daily Update: May 8 2012

Weakness Continues: May 8, 2012

Nifty May Futures closed at 5005.60 down by 120.35 points. Bank Nifty too was vulnerable and closed at 9556.85 down by 315.50 points. Open Interest in Nifty across all the series saw a whooping increase by 19 lakh shares at 2.20 Cr shares indicating fresh shorts in large proportions created in the Nifty Futures. Turnover was slightly lower than yesterday at Rs 1.27 trillion. Put Call Ratio came down to 0.91 indicating traders are writing Calls against Puts which again doesn’t augur well for Bulls. Volatility as measured by India VIX shot up by 10% at 22.16 and Dollar Rupee pair too was trading slightly higher at 53.43 indicating pressure on Rupee which again is not a good sign. In nutshell it was a day of Bears who found the opportunity to sell in the market as they saw momentum in the market was waning out.

In my opinion, Nifty is not able to hold on the gains and it completely gave away all its gains and closed lower today indicating weak trend in the market. We are at crucial juncture as 4987 is 61.8% retracement level of last Bull Run. If Nifty is not able to sustain this level Bull scenario will be construed to be over and every rise thereafter will be a shorting opportunity. As long as we are holding this level on closing basis and we are able to find some buying emerging at this level, we might see Nifty attempting to reach 5300 levels. If such scenario plays out than we might have made intermediate bottom around this level which will act as good support in coming days.

Top five individual stocks which gained today were PETRONET 4%, TTKPRESTIG 3%, BOSCHLTD 3%, BHARATFORG 3% and CESC 2%. 

Top five individual stocks which lost ground were CENTRALBK -13%, JPASSOCIAT -9%, INDIAINFO -8%, PANTALOON -8% and GMRINFRA -8%.

Top five individual stocks which attracted higher volumes were SBIN, ICICIBANK, TCS, RELIANCE and AXISBANK.

Top five individual options which attracted higher activity today were SBIN 2100 CE, SBIN 2200 CE, RELIANCE 720 CE, SBIN 1900 PE and SBIN 2000CE.

Nifty option series where POSITIVE change in open interest was seen were 5000 CE (11.64 LK) 5100 CE (11 LK) 5200 CE (12.36 LK) 5300 CE (7.93 LK0 5400 CE (10.19 LK) 5500 CE (3.68 LK) 4400 PE (1.26 LK) 4500 PE (3.41 LK) 4700 CE (7.90 LK) 4800 PE (9.83 LK) 4900 PE (10.92 LK) 5000 PE (2.59 LK)

Nifty option series where NEGATIVE change in open interest was seen were 5600 CE (1.13 LK) 5100 PE (2.92 LK)

Outstanding open interest in Out of the Money Call Options stood at 3.88 Cr shares and that of Put Options stood at 1.96 Cr shares. Outstanding open interest in In the Money Call Options stood at 23.80 LK shares and that of Put Options stood at 1.81 Cr shares. Put Call Ratio of current series alone stands at 0.91.

Happy Trading

Atul Doshi