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K.S. Badri Narayanan

THERE was no let-up in trading activity at the derivative segment on the National Stock Exchange, as the Nifty surged 1.3 per cent on Friday with heavy volumes. Turnover in the futures & options segment jumped to Rs 12,285 crore as against Thursday's Rs 11,211 crore. With just three days for expiry (on Wednesday) for December contracts, most of the counters saw heavy rollovers to January month contracts.

Cumulative FII positions as a percentage of the total gross market position in the derivative segment on December 18 was 15.27 per cent.

FIIs, who were only on the sell side on index futures on Wednesday, however, turned net buyers to the tune of 872 contracts (They bought 1,372 contracts and sold 500 contracts on index futures).

The turnaround of FIIs positions suggests that they have bullish outlook on the market. It may be recalled that on Wednesday, FIIs sold 2,948 contracts and bought only one contract.

Index futures: The Nifty spot closed at 1778.55 against the previous day's close of 1756.10. The Nifty future contracts also mimicked the spot trend; the December Nifty futures closed the day higher at 1772 (1746.85). Open interest position slipped by close to 6 per cent to 39,116 contracts. The January Nifty futures ended the day at 1766.90 (1745.05) while open interest positions surged over 23 per cent to 7,943 contracts.

The market is in backwardation as both these contracts maintained the sharp discount to the spot close. A market is considered to be in backwardation when the cash price exceeds the future price or a nearby futures price is greater than a more distant futures price. The discount suggests cautious outlook with limited upside. However, the unmatched order book on the NSE suggests bullish outlook as buyers outnumbered the sellers.

Stock futures: The most active counters were Reliance Industries, Tata Motors, Tata Steel and Satyam Computer. Apart from them, counters such as ACC, Punjab National Bank, Shipping Corporation, Maruti, Larsen & Toubro and Arvind Mills also witnessed keen interest.

Reliance, which registered its new high on the bourses on Friday, was the star performer and attracted a volume of 25,099 contracts.

The Reliance December futures closed at Rs 519.85 (Rs 509.05) with open interest slipping by close to 17 per cent to 9,581 contracts. The Reliance January contracts closed at Rs 523.60 (Rs 514.10) with open interest jumping by over 28 per cent to 3,732 contracts. The Reliance spot closed the day at Rs 520.70.

Other counters that saw substantial rollover of positions were from the Tata group such as Tata Motors and Tata Steel. Rollover was also visible in Shipping Corporation, MTNL, Gail India, Grasim and Canara Bank.

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