FnO Trends and Outlook for this week

Derivatives: Market will continue to remain cautious

F&O activity emits mixed signal with option indicating negative trend; global market activity will give cues and the market will continue to remain cautious.

The market movement remained flat during the week ended 11^th December 2009 with really mixed kind of signals from the futures & options (F&O) activity all through-out the week. On Friday the Nifty corrected by 17.35 after the announcement of weaker than expected Industrial production (IIP) data. The industrial production growth though robust at 10.3% fell below market expectations of a growth of 13% to 14% for the month. For the full week though the nifty index closed 8.4 points higher at 5117.30. The average volume in the F&O segment duringthe week under review stood at Rs 63619.86 crore. Although the nifty future remained at a premium to the underlying during the start of the week, on Friday however it closed at a discount of 5.70 points to the underlying at 5111.60. On Friday however the nifty closed lower and the nifty future shed 2.78 lakh shares in open interest (OI) to take the total OI to 2.71 crore shares. For the full week under review the nifty future shed 38450 shares in OI. Some of the front-line stock futures like Reliance, ICICI Bank, DLF, SBIN, Sail and Bharti also shed OI during the week. However Tata Steel, Tata Motors, Unitech and Maruti increased OI during the week.

On Friday Reliance shed 7.4 lakh shares in OI to take its total OI to 1.05 crore shares. ICICI Bank, DLF, SBIN and Sail shed 5.08 lakh shares, 4.41 lakh shares, 0.75 lakh shares and 12.74 lakhshares in OI during the week under review. The OI of these decreased to 1.22 crore shares, 1.05 crore shares, 33.75 lakh shares and 90.69 lakh shares respectively.

In the nifty option front there were negative signals as fresh call were being written from 5000 to 5400 strike as puts written at 4900 and 5000 strikes earlier were covered on Friday. There were fresh put buying of 5100 and 5200 strikes.

Volume in the Futures & Options segment of the NSE (Turnover (Rs. Crore.)
Date	Index Futures	Stock Futures	Index Options	Stock Options	Total
27-Nov-09	24665	19895	49581	1934	96075
30-Nov-09	17464	17199	30912	1973	67548
1-Dec-09	12606	17793	28166	2091	60657
2-Dec-09	11866	19831	22893	2126	56715
3-Dec-09	14559	18200	25938	1964	60660
4-Dec-09	17412	17490	34873	1756	71531
7-Dec-09	14002	14780	27395	1864	58041
8-Dec-09	17641	17741	31994	2052	69429
9-Dec-09	15259	16937	27174	1945	61314
10-Dec-09	14415	15059	26852	1658	57983
11-Dec-09	17440	16121	35873	1898	71332
Source: NSE

Overall the market wide OI on Friday stood at 183.21 crore shares, thus gaining only marginally as compared to the previous trading day, however OI increased by 14.05 crore shares as compared to the previous week. Increase in week-on-week OI was due to increased activity inStock futures and option segment whose OI increased by 6.16 crore shares and 6.26 crore shares respectively on a week-on-week basis. During Friday index futures and share futures shed OI as compared to the previous day. (See table OI breakup).

Open Interest (OI) break-up as on 11th December 2009
	Open Interest (OI)*	Change**
Market wide	183.21	0.68
Index Future	3.10	-0.03
Stock Future	141.33	-0.89
Index Options	12.00	0.37
Stock options	26.79	1.22
* No of shares in crores ** Change is vis-à-vis previous day Source: NSE

OI of 5000 to 5400 call increased due to aggressive call writing at these levels. For e.g. 5100 and 5200 strike calls OI increased by 9.12 lakh share and 11.70 lakh shares respectively to take the total OI to 46.38 lakh shares and 65.93 lakh shares respectively. The 5300 strike call increased OI by nearly 4 lakh shares on Friday.

The 5100 and 5200 put witnessed addition of 3.97 lakh shares and 0.96 lakh shares respectively to take the total OI of these strikes to 38.63 lakh shares and 25 lakh shares respectively. (See most active Nifty options table).

Most active Nifty options (December series)
	OI
Call
Nifty 5100	4637500
Nifty 5200	6592550
Nifty 5300	4761800
Put
Nifty 4900	5068750
Nifty 5000	5543000
Nifty 5100	3863450
Source: NSE

Top 10 Open Interest (OI) gainers in December series stock futures on 11th December 2009
Scrip Name	OI*	Change*	% Change
RENUKA	13715000	2447500	15
APIL	658800	105600	14
IDEA	28139400	3604500	11
ORIENTBANK	1782000	224400	11
HCLTECH	2275000	241800	10
TATACOMM	1563450	149625	9
JINDALSTEL	7107840	661440	9
GVKPIL	34162000	2607750	7
RECLTD	2449200	173550	7
SAIL	9069300	565650	6
* No of shares Source: NSE

Top 10 Open Interest (OI) losers in December series stock futures on 11th December 2009
Scrip Name	OI*	Change*	% Change
CROMPGREAV	400000	-87000	-28
CHAMBLFERT	8062650	-1697400	-27
PIRHEALTH	327000	-64500	-25
DABUR	977400	-164700	-20
DENABANK	11392500	-1601250	-16
BEL	127236	-17664	-16
VOLTAS	1854900	-251100	-16
HDIL	6390918	-797220	-14
ROLTA	3024000	-365400	-14
ONGC	1662525	-174600	-12
* No of shares Source: NSE

Thus the F&O activity emits a mixed signal although the option indications are negative. Going forward the global market activity will remain the cue. The market will continue to remain cautious.