BSE, NSE witness sustained buying

Anup Menon

OVERALL Trends: The market saw some sustained buying interest for a major part of the previous week. On a week on week basis the benchmark, BSE Sensex, gained close to 4.2 per cent to close at 4032.

The trends in the NSE mirrored that on the BSE with perfection with the S&P CNX Nifty also closing the week up by around 4.2 per cent at 1276.2 points as compared to the previous week.

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The futures market tracked the movements in the spot markets closely. For instance the Sensex one month contract closed the week up by around 4.7 per cent at 4062.10. The contract with the same maturity on the Nifty went up by around 4.3 per cent to close at 1269.40 points.

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Trading statistics: The trends in volumes show some trading interest during the course of the week. Total volumes on the BSE recorded a relatively subdued improvement as against the NSE where there was a significant increase. The total volumes on the Sensex contracts increased by around 10 per cent to 2003 contracts as against 1821 contracts traded the week before. At the NSE, volumes increased substantially with 2375 contracts being traded as compared to 1075 contracts traded the week before.

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Nifty November: The Nifty November contract matured during the week. Total traded volumes stood at around 1289 contracts as compared to 724 contracts traded the week before. The valuation of the contract in the previous week would have yielded profitable opportunities for investors with a long position.

Nifty December: The Nifty December contract moves into the one month trading range. This is likely to have a positive impact on the liquidity of the contract. Total volumes in December stood at around 1359 contracts as compared to 275 contracts traded in the week before. The open interest stood at 702 contracts.

The valuation of the contract based on Thursdays close provides some scope for arbitrage. The implied cost of carry on the contract works out to around 3.34 per cent. Investors can consider taking a long position in the contract.

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Nifty January: The Nifty January contract moves into the two month trading range. Volumes were more or less stagnant with 87 contracts being traded during the week as against 76 contracts traded the week before. The implied cost of carry on the contract works out to around 6.40 per cent. Though an investor with a high risk profile can consider taking a long position in the contract, given the liquidity risk, associated with the contract, fresh investments need not be considered at present levels.

Sensex November: The Sensex November contract, which matured during the week, remained the most actively traded contract among the Sensex. Total volumes stood at around 1053 contracts and the open interest position at the end of the week stood at 517 contracts.

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Sensex December: Trading interest in the Sensex December contract, which moved into the one-month trading range was fairly high. Total volumes increased from around 582 contracts to 909 contracts during the week. The valuation of the contract based on the last day of trading does not provide scope for arbitrage. The implied cost of carry on the contract works out to around 10 per cent. Fresh investments need not be considered at present levels.

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Sensex January: The Sensex January contract has moved into the two month trading range. Total volume recorded a marginal increase during the week to 41 contracts as compared to 34 contracts in the previous week. The valuation of the contract based on the last day of trading provides scope for arbitrage. The implied cost of carry on the contract works out to around 4.85 per cent. Long positions can be initiated at present levels.