Futures volumes good

Anup Menon

Overall Trends: The cash market treaded in positive territory for most part of the previous week.

On a week on week basis, the BSE Sensex closed the week up by around 2.3 per cent over its previous close. The trends at the National Stock Exchange were in line with that of the previous week. The S&P CNX Nifty closed the week up by around 2.2 per cent over its previous close. The trends in the futures market were in line with that of the cash market. For instance the near month contract at the BSE closed the week up by around 3.2 per cent over its previous week. The contract with the same maturity on the Nifty ended the week up by around 5 per cent over its previous week.

Trading Statistics: Volumes in the futures market during the week was fairly good with the NSE capturing a vast majority of the total volumes. At the BSE volumes during the week stood at around 7,188. At the National Stock Exchange total volumes during the week stood at around 32,441 contracts.

Nifty November: The Nifty November is the nearest maturity contract in the Nifty family. During the course of the week close to 22,828 contracts were traded during the course of the week. Investors who had long positions 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 scope for trading profits. The implied cost of carry on the contract works out to a negative 46 per cent. Fresh long positions can be considered at current levels.

Nifty December: The Nifty December contract also managed to attract some trading interest during the course of the week. Close to 8483 contracts was traded during the course of the week. Trading interest in the contract is likely to improve over the next couple of weeks when the contract moves into the one month trading range. 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 2 per cent. Fresh long positions can be considered at current levels.

Nifty January: The Nifty January is the longest maturity contract in the Nifty family. Traded volumes were relatively low with just around 1130 contracts being traded during the week. The contract moves into the two month trading range shortly. However investors can wait for another couple of weeks before considering fresh positions in the contract.

Sensex November: The Sensex November is the most actively traded contract in the Sensex family. Close to 845 contracts were traded during the course of the week. Investors with a long position in the contract could have closed out their position profitably during the 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 works out to around 7 per cent. Fresh positions need not be considered at current levels.

Sensex December/January: The Sensex December contract trades in the two month range. Activity in the contract is relatively mild. During the course of the week 114 contracts. Similar trends were present in the Sensex January contract also, which is the longest maturity contract in the Sensex family. Given the high level of illiquidity attached to these contract, fresh positions need not be considered at current levels.