The Hindu Business Line : Churning of positions to March contracts seen

EVEN as the spot market witnessed volatile action on Tuesday, trading activity picked up in the derivative segment on the NSE with only two days left for the settlement of February contracts. (February contracts are expiring on February 26). The F&O segment witnessed a turnover of Rs 17,750 crore on Tuesday against Monday's Rs 13,441 crore.

Index futures: The NSE S&P CNX Nifty index moved in a wide range of 1826.85 - 1780.35 before settling for the day at 1821.35, a gain of 0.7 per cent over the previous close.

The Nifty February futures closed with a marginal premium to the spot at 1822.95; Open interest position slipped over 26 per cent to 25,188 contracts. The February contract had closed at 1810.30 on Monday.

Despite closing higher, the unmatched order book on the NSE suggests bearish outlook as sell side outnumbered the buy side; the reduced cost of carry also underpinned the same view.

The Nifty March futures closed at 1821.15 (1808.75) and at a discount to the spot by 0.20 points. The surge in open interest by close to 75 per cent to 17,859 contracts suggests that traders are shifting their position from February to March contracts.

The farther month Nifty April contracts closed at 1820.80 (1812.35), but witnessed only restricted activity.

Stock futures: The near month February contracts were active. Among them, Reliance, Tata Steel, Satyam Computer, SBI and Maruti were the most active. Among March series, Reliance was the top traded counter. While the IT, banking and PSU sectors witnessed selling pressure, strong buying in auto, steel and cement stocks helped the market recover.

Maruti, was one of the auto stocks which witnessed hectic activity. The Maruti February contract closed the day higher at Rs 503.20 (Rs 495.90); open interest declined to 1,489 contracts (1,607 contracts). The Maruti stock closed the day at Rs 501.

The March futures on Maruti closed higher at Rs 506 (Rs 499.10) with open interest positions improving sharply to 729 contracts (518 contracts). The higher cost of carry and the unmatched order book on the NSE suggest positive outlook for the counter.

FII position: Cumulative FII positions, as percentage of total gross market position in the derivative segment as on Monday stood at 19.96 per cent.