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Anup Menon

OVERALL Trends: The week saw some positive sentiment underlying trading in the spot equity market. On a week-on-week basis, the BSE Sensex gained close to 0.3 per cent over the previous week, thus extending its gain for the second successive week.

The cumulative gain in the index over the last two weeks stands at 1.2 per cent. The trend at the National Stock Exchange was in line with that of the BSE with the S&P CNX Nifty closing the week up by around 0.4 per cent at 1146.5 points.

The trend in the futures market was in line with that of the cash market. For instance, the near-month contract at the BSE ended the week up by around 0.2 per cent over the previous week. In the same time frame, the contract with the same maturity on the Nifty ended the week up by around 0.5 per cent.

Trading Statistics: Trading interest at both the NSE and the BSE continued to decline during the week. Total volumes at the NSE declined by around 8 per cent to 11,976 contracts as compared to the week before. In the same time frame, volumes at the BSE declined by around 55 per cent to 250 contracts as compared to 550 contracts traded the week before.

Nifty April: The Nifty April contract remained the most actively traded contract in the Nifty family. Volumes declined during the week by around 23 per cent to 11,118 contracts as compared to the previous week. As recommended in the previous week, investors with a long position in the contract could have closed out their position profitably during the course of the week. The valuation of the contract, based on the last day of trading, provides some scope for trading profits. The implied cost of carry-on-the-contract works out to a negative 3.5 per cent. Fresh long positions can be considered at current levels.

Nifty May: The Nifty May contract is likely to start attracting market interest as the week's progress. Trading interest in the contract improved during the week by around 31 per cent to 831 contracts as compared to 635 contracts traded the week before. As recommended in the previous week, investors with a long position in the contract could have closed out their position profitably. The valuation of the contract, based on the last day of trading, does provide some scope for trading profits. The implied cost of carry-on-the-contract works out to a negative 0.33 per cent. Fresh long positions can be considered at current levels.

Nifty June: The Nifty June contract is the longest maturity contract in the Nifty family. Trading interest in the contract was not high with just around 27 contracts being traded during the week. Given the high level of liquidity risk in the contract, fresh positions need not be considered at current levels.

Sensex April: The Sensex April contract now trades in the one-month trading range. During the week, volumes in the contract declined by around 55 per cent to 250 contracts as compared to the same period in the previous week. The valuation of the contract, based on the last day of trading, does not provide much scope for trading profits. The implied cost of carry-on-the-contract works out to around 7 per cent. Fresh positions need not be considered at current levels.

Sensex May/June: The Sensex May contract now trades in the two-month trading range. There was virtually no activity in the contract during the week. This trend prevailed for the Sensex June maturity also. Keeping in mind the high liquidity risk, fresh positions need not be considered at current levels.

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