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C. Raja Rajeshwari

MUCH of the action in the previous week has been in the contracts of the bank stocks. A substantial build-up in open interest is seen in April futures of ICICI Bank, Union Bank of India, Bank of Baroda, Canara Bank and Andhra Bank. Trading interest in contracts of Infosys, Mastek, i-flex and Polaris was also pronounced.

Bank stocks: Futures on ICICI Bank have been active due to the public offer, which was open in the previous week. The stock has been range bound at the 280-290 levels. The announcement of the offer price - Rs 280 per share - led to a substantial increase in its open interest. The momentum in the build up of open interest has just started and could provide an upward bias in the coming week.

The Bank of Baroda spot, which showed a sharp decline at the start of the week, bounced back the week to end at higher levels.

ONCC: The stock would be included in the Nifty from Monday. The April futures were weak during the middle of the week and had a decline in open interest. On the last trading day, there was a sharp uptrend in the stock, but the build-up in the open interest was at moderate levels. Hence, the price and open interest trends in early trading next week would provide a clearer signal for the price movement.

Tech stocks: The annual earnings announcement of Infosys, which is due on April 13, has perked up the trading on the futures. However, open interest of CNX IT Futures and April futures of HCL Technologies, Wipro and Satyam Computers has shown a decline. The implied volatility of options on Infosys, Satyam Computers, HCL Technologies and Mastek have declined over the week with an increase in liquidity.

The open interest in the April futures of Wipro declined by 16 per cent. This decline signifies that most short positions taken earlier have been closed out. The surge in the stock price on the last trading day accompanied by a build-up in open interest points to a further continuation of the uptrend in the stock. April at-the-money calls can be purchased to take advantage of the uptrend.

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