The Hindu Business Line : Volatile market, tread with caution

MARKETS were in the upswing for most of the week. The benchmark index S&P CNX Nifty gained 63.4 points to close the week at 1311.15 points. Open interest has jumped for all the August contracts. There are four trading days for the August contracts to expire.

Interest in September contracts has jumped in the stocks such as Maruti, Shipping Corporation, Satyam Computers, Tata Steel, Infosys and Tata Motors. Calls have been most active than puts owing to the frenzied rally.

Nifty: Volumes in put contracts have increased owing to the volatile intraday movements of the index.

# The put-call open interest ratio has further increased to 1.02 for this week ended as compared with last week's 0.98, indicating weakness in the stocks for the week ahead.

# With August contracts expiring in the coming week, the index may turn highly volatile owing to the rollover/ closure of positions.

# The implied volatility of Nifty calls reduced from 23.43 per cent of previous week to 17.57 per cent. However, the implied volatility of puts remained stuck in the 23 per cent range.

Tata Steel: The stock has been volatile in the steel rally. The spot has gained Rs 10 to Rs 252.60, in spite of the profit-taking in the steel stocks over the week.

# The open interest stood at 97 per cent of the market wide-open interest.

# The put-call open interest closed the week at 0.60, swinging up from last week's 0.55. The stock looks undecided, with large movements on either side.

# However, with open interest hitting more than 90 per cent and trading interest shifting to September contracts, the margins to be maintained are set to increase.

Implied volatility would increase making the options costlier.

SBI: The banking stocks have not been sought after over the week.

The put-call open interest ratio closed at 0.482. The ratio would fall on call positions increasing or positions in put closed out.

The spot closed the week higher by Rs 3.5 to Rs 434.35.

Reliance: The stock has been heavily traded.

One factor that has been fuelling the stock is the anticipation of a likely stock split in the near future.

# The spot has gained 7 per cent over last week' close of Rs 358.60

# The August futures closed the week at an Rs 8.7 discount to spot.

# The open interest across contracts stood at 15 per cent of the market wide-open interest.

# Put-call open interest ratio has jumped to 0.66 as compared with 0.35 of the previous week.

# This huge jump indicates caution in the market, as investors are bearish. There may be weakness in the stock owing to profit-taking.

MTNL: The trading interest has caught up in this stock.

# Rumours of foreign buyers have been fuelling this stock, which has gained 6 per cent on a week-on-week basis.

# The August contracts closed at discount to spot.

# Put-call interest ratio at 0.258, clearly indicates the bullishness in the stock for the weak ahead.

Maruti: The spot has been in the upward journey from its listing. However, the interest has perked up from the stock's inclusion in MSCI's India Index.

# The spot has increased 6 per cent on a week-on-week basis.

# The open interest stood at 86 per cent of the market wide-open interest.

# Owing to this increase the margins levied has been on the increase.

# The put-call open interest stood at 0.568 indicating no clear direction of the stock movements.

If you have any queries relating to the futures/options please mail them to Futures & Options, Kasturi & sons, 859-860, Anna Salai, Chennai 600 002 or email them to

fno@thehindu.co.in

with a mention of futures/options in the subject line of the mail.

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