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K.S. Badri Narayanan

THE market was volatile last week — while the first four days saw steep erosion in values, the last day (Friday) recovered a part of the losses. Volatility coupled with festive mood seemed to have taken away the investors' interest from the market both in cash and futures & options markets if the low trading activity is any indication.

The NSE's move to increase the applicable exposure limit in 19 securities including ACC, Andhra Bank, Digital GlobalSoft, Maruti, Mastek, Punjab National Bank, Polaris, Satyam, SBI, Tata Steel and Union Bank also pushed the market relatively down.

The average daily turnover in F&O segment at the National Stock Exchange for the week ending Friday slipped to Rs 10,752 crore from Rs 11,155 crore registered the week before; this was despite the market recording an all-time high turnover of Rs 12,519.55 crore on Tuesday.

Despite that only a week away for settlement, the October contracts were most active. Open interest positions were shifted to the November contracts. Here again, the churning of positions was not as high as in preceding two months.

Index futures: After dipping to as low as 1466.25, the NSE Nifty managed to end the week above the psychological 1500-mark at 1506.65, still a drop of about 4 per cent over the previous week close of 1569.45.

Despite the sharp fall, the near-month Nifty October futures closed the week at a premium to the spot by about 10 points at 1516.20 and against the previous week's close of 1573. Open interest position declined steadily during the week and slipped to 25,763 contracts from 27,261 contracts, which is quite normal ahead of settlement week. The Nifty November futures closed the week at 1517.55 (1572); Open interest position increased to 4274 contracts (1,489 contracts).

Stock futures: Tata Steel was the most active counter followed by Sataym Computer, Tata Motors, ACC, Reliance and SBI. ACC witnessed frenzied activity as the company declared improved second quarter results on October 22. ACC posted a net profit of Rs 27.88 crore for the quarter ended September 2003 against Rs 5.12 crore recorded during the same period previous year.

The ACC October futures closed the week at Rs 200.60 as against last week's close of Rs 219.20; open interest slipped to 4896 contracts (6019 contracts). The November contracts closed at Rs 202.25 (Rs 219.05) and open interest increased to 954 contracts (77 contracts). Both these contracts ended the week in premium to the underlying ACC close of Rs 199.20.

Tata Steel has been more consistent in attracting market attention in recent weeks; the October futures on Tata Steel closed lower at Rs 346 (Rs 357.60) with open interest slipping to 5506 contracts (6269 contracts). The November futures closed at Rs 348.50 (Rs 360) while open interest rose to 1001 contracts (213 contracts). Both the contracts are trading at a premium to the spot price of Rs 341.35. Tata Steel is scheduled to announce its second quarter financial performance on October 30.

Index options: After a long gap, the Nifty puts also witnessed strong activity, signalling that the markets are precariously placed. With the market oscillating around the 1500-mark, the October 1500-strike for both puts and calls was actively traded. The October 1490 and the 1520 strikes witnessed active trading among calls while the October 1480 and the 1450 strikes were actively trading among puts.

As the market tumbled, the Nifty 1500 calls closed the week sharply lower at Rs 34.35 (Rs 79.90); open interest, however, improved to 1225 contracts (832 contracts).

On the other hand, the Nifty 1500 puts closed higher at Rs 14 (Rs 9.50). (The premium of Nifty puts was as high as Rs 43 during the week). Open interest position slipped to 853 contracts (1468 contracts).

Equity options: Tata Steel, Tata Motors, Satyam Computer, HLL, HPCL and Reliance were the most active contracts. Tata Motors is scheduled to announce its second quarter performance on October 29.

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