Nifty volumes rise

Anup Menon

Overall Trends: Negative sentiment prevailed in the market after the Indian Parliament came under terrorist attack.

On a week on week basis, the BSE Sensex closed down by around 2.4 per cent over its previous close. The trends at the National Stock Exchange were also in line with that of the BSE. The S&P CNX nifty closed the weep down by around 2.2 per cent over the previous week.

The trends in the futures market was in line with that of the cash market. For instance the near month contract at the BSE closed the week down by around 2.1 per cent over the previous week. The contract with the same maturity on the Nifty closed the week down by around 2.1 per cent.

Trading Statistics: Trading volumes in the two exchanges showed divergent trends. At the NSE total volumes during the week stood at around 27,431, up by around 20 per cent over the previous week. In the same time frame total volumes at the BSE registered a 45 per cent decline to around 8,190 contracts.

Nifty December: The Nifty December contract was the most actively traded contract in the Nifty family. During the course of the week total volumes in the contract improved by around 14 per cent to around 23,816 contracts as compared to the previous week. As recommended in the previous week long positions in the contract could have been closed out 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 around 3 per cent. Investors can consider taking long positions in the contract.

Nifty January: The Nifty January contract was the second most actively traded contract in the Nifty family. Traded volumes in the contract declined marginally by around 1 per cent to 1669 contract as compared to the previous week. As recommended in the previous week, investors with a long position in the contract could have closed it 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 0.8 per cent. Fresh long positions can be considered at current levels.

Nifty February: The Nifty February is the longest maturity contract. It is also the least liquid in the Nifty family. Traded volumes improved during the week to around 1946 contracts. Investors can give it a further week and let volumes improve further before considering fresh positions.

Sensex December: The Sensex December contract was the most actively traded contract during the course of the week. Traded volumes during the week declined by around 45 per cent to 8100 contracts. As recommended in the previous week investors with a long position could have closed out their position profitably. The valuation of the contract based on the last day of trading works out to around 7.52 per cent. Fresh positions need not be considered at current levels.

Sensex January/February: The Sensex January contract trades in the two month trading range. There was hardly any trading interest in both the February and January contracts. This trend is likely to continue over the next week or so. The January contract will be moving into the one month trading range over the next couple of weeks. Trading interest in the contract is likely to improve after that. Till then investors can stay away from both the two and three month Sensex contracts.