The Hindu Business Line : Volumes take a beating in derivatives segment

TURNOVER dipped sharply at the derivative segment on the NSE to Rs 6,378 crore on Friday against Rs 10,803 crore recorded on Thursday, which saw the settlement of June month contracts. It was for the first time in June that the turnover in the F&O segment topped the Rs 10,000-crore mark.

With the June contracts being settled on Thursday, it seems traders preferred to wait on the sidelines, setting their sight on the July 8 Budget.

Index movement: The spot S&P CNX Nifty gained 1.2 per cent to end the day at 1488.50, after touching a high of 1494 and a low of 1459.55.

Index futures: The July Nifty futures closed the day at 1467, a discount of 21.50 points to the spot close. The discount widened marginally on Friday. Open interest positions improved by 5 per cent to 36,611 contracts. The August Nifty contracts closed at 1459.15, a discount of 29.35 points; open interest positions surged by over 58 per cent to 391 contracts.

The unmatched bid/ask order book on the NSE is pointing to bearish outlook as the sell-side orders were outnumbered by the buy-side orders.

While the implied volatility of puts inched up marginally to 43 per cent, the same for the calls still hovers around 28 per cent. The put/call ratio stood around 0.82 levels.

The unmatched order book, higher puts implied volatility and put/call ratio and the widening of discount indicate downward bias of the market.

However, since the market is trading on a low volume, the possibility of these indicators going wrong is quite high. So it is advised that adopting a wait-and-watch strategy is better until the Union Budget is presented.

Stock futures: Among the individual stocks, the most active future contracts were Tata Steel, Reliance Industries, Satyam Computer and Tata Motors.

The July Tisco futures closed the day at Rs 296 on par with the spot close. Open interest positions improved slightly to 8,259 contracts.

The July futures on Reliance Industries closed at Rs 431.90, almost on par with the spot close of Rs 431.60; open positions improved only marginally to 8,443 contracts.

FII positions: FIIs cut down their open positions in Nifty futures and did not roll over all their outstanding positions to the July series. The open interest in the Nifty as on Thursday was at 31,772 contracts, down 25 per cent. FIIs' positions in stock futures were at 53,970 contracts, down 21 per cent. FIIs open interest now stands at Rs 2,301 crore.

They were, however, net buyers to the tune of Rs 145 crore on Thursday.