No significant movement on bourses

Anup Menon

OVERALL Trends: Trading in the spot market went through a dull phase with the broad market indices hardly making any significant move in either direction. On a week-on-week basis, the BSE Sensex closed the week at 3022.20 points, up by around 0.2 per cent over its previous close. The trends at the National Stock Exchange were in line with that of the cash market with the S&P CNX Nifty closing the week up by around 0.7 per cent over its previous close.

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The trends in the futures market was more divergent. For instance while the movement in the BSE futures was comparatively restricted, there was some trading interest in Nifty futures. The near-month futures contract on the Nifty closed the week up by around 3.3 per cent over its previous close.

Trading Statistics: Volumes in the futures market declined during the course of the week. At the BSE, volumes declined by around 20 per cent to 5910 contracts as compared to 7400 contracts traded the week before.

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In the same time frame volumes at the NSE also declined by around 8 per cent to 29,694 contracts as compared to 32,252 contracts traded the week before.

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Nifty October: The Nifty October contract matured during the course of the week. During the week, volumes in the contract declined by around 26 per cent to 17,372 contracts as compared to the same period in the previous week. As recommended in the previous week, investors with a long position in the contract could have closed out their position profitably.

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Nifty November: From the following week the Nifty November contract is the near maturity contract. This should lead to more active trading interest in the contract. During the week, volumes improved by around 38 per cent to 10,657 contracts as compared to 7,717 contracts traded the week before.

As recommended in the previous week long positions in the contract could have been closed out profitably. 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 5 per cent. Fresh long positions can be considered at current levels.

Nifty December: The Nifty December now moves into the two-month trading range. Thought this may not lead to a very significant improvement in volumes, it should pick up gradually over time. Total traded volumes during the week improved by around 37 per cent to 1,665 contracts as compared to 1,219 contracts traded the week before. 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 0.71 per cent. Investors with a penchant for risk can consider taking fresh long positions in the contract.

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Sensex October: The Sensex October contract matured during the course of the week. Volumes in the contract declined by around 47 per cent to around 3,130 contracts as compared to 5,930 contracts traded the week before.

Sensex November: The Sensex November contract will move into the one-month trading range from the following week. Volumes in the contract more than doubled during the week to around 2,570 contracts as compared to 1,110 contracts traded the week before. The valuation of the contract does not provide much scope for trading profits. The implied cost of carry-on-the-contract works out to around 9 per cent. Fresh exposure need not be considered at current levels.

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Sensex December: The Sensex December contract now moves into the two-month trading range. Volumes in the contract will tend to pick up over the next few weeks. During the week, volumes declined by around 50 per cent to 210 contracts as compared to the week before. However, given the high level of liquidity risk, fresh investments need not be considered at current levels.