The Hindu Business Line : CNX-IT sees build-up in open interest positions

DESPITE just three days being left for settlement of June month contracts, trading was lacklustre at the derivative segment on the NSE on Monday. The F&O segment witnessed a turnover of Rs 7,116 crore against last Friday's turnover of Rs 8,090 crore.

Index futures: The near-month June Nifty futures closed weak at 1,475.85 against the spot close of 1,482 points, a discount of 6.15 points. Open interest fell by 14 per cent to 44,592 contracts.

The discount was even sharper and widened further to 34.25 points for the July Nifty contracts, which closed at 1,447.75. Open interest positions, however, improved sharply to 15,320 contracts.

The put/call ratio though declined marginally to 0.69, which is still high, indicating the weakness of the market. While implied volatility of Nifty puts increased 48 per cent, the same for calls declined to 26 per cent. This means that traders are willing take risk on the downside.

Higher put/call ratio, jump in puts volatility and the huge backwardation of July futures appear to suggest that all is not well in the market.

CNX-IT: Quite contrary to the market, the CNX-IT index ended the day on a positive note at 2,059.35, a gain of 1.53 per cent over the previous close. The near-month June futures closed at 2,046.05 and saw an improvement in open interest positions to 487 contracts.

The July CNX-IT futures closed with further discount (to the spot) at 2,032.50 points while open positions improved to 70 contracts.

While the implied volatility remained the same around 56 per cent levels for both the puts and calls, the put/call ratio stood 0.16, painting a bullish outlook for the index. Since the market is trading on low volumes, traders are advised caution.

Stock futures: The most active futures contracts were SBI, Satyam Computer, Tata Motors and Reliance Industries.

Rollover of around 30 per cent of open positions (from June to July series) was seen in stock futures.

Most banking stocks fell with a rise in open interest and the sector looks weak.

The SBI June futures closed at Rs 415.95 against spot close of Rs 416.10 and open interest slipped only marginally to 6,013 contracts. The July contracts also closed lower at Rs 405.95 while open positions surged to 2,225 contracts. A steady rise in open interest positions and the fall in price generally depict a weak outlook.

FII positions: FIIs were net buyers to the tune of Rs 32 crore on Friday. The cumulative FII positions as percentage of total gross market position as on Friday was 23.17 per cent.