Investment & Trading

The domestic equity markets, settled the futures & options'(F&O) expiry week on a negative note. The Street witnessed high volatility and record volume during the passing week on account of F&O October series expiry.The key indices finished higher on two out of five trading sessions of the week.The cuts on the broader indices were even severe compared to their larger peers.Though Q2 earnings’season has so far remained good for India Inc.,the markets that have already witnessed sharp up-move in past two months are looking a bit exhausted for further rally at this point.During the week,only consumer durables and auto gauges managed to show respectable gains while realty,power and public sector undertaking witnessed maximum unwinding of positions from traders.

The markets witnessed a gargantuan turnover of over Rs 2.82 lakh crore in the day’s trade which is highest ever in the history of Indian markets while the previous high of over Rs 2.36 lakh crore of turnover was registered on the day of September expiry.The markets also witnessed vast rollovers today in stocks like ABG Shipyard (89%),Orchid Chemicals (87%) and Andhra Bank (76%). Total open interest (OI) for the October series expiry remained around 10% lower than September expiry. On the global front,markets in Asia ended mostly in the positive terrain while sentiments in Europe remained strong as they traded with sturdy gains of over half a percent points. Back home, buying interests in Heavyweights like Reliance, Bharti Airtel and Hero Honda gave some support to the frontline indices while the broader markets proved to be the laggards today.Huge profit bookings marred all the sectoral indices on the NSE,with the Realty index being the biggest loser with 1.99% losses.The India VIX, a gauge for market’s short term expectation of volatility,decreased 2.37% and reached 20.52 at close.

Nifty November futures saw an addition of 5.93% or 1.44 million (mn) units,taking the total outstanding open interest (OI) to 25.85 mn units.For Nifty calls,6100 strike price (SP) from the November series was the most active call with an addition of 1.25 mn or 43.25%. Among Nifty puts, 6000 SP from the November month expiry was the most active put with an addition of 0.81 mn or 19.02%.The maximum Call OI outstanding was at 6100 SP (4.16 mn) and that for Puts at 6000 SP (5.09 mn.The Nifty Put Call Ratio (PCR) OI wise stood at 1.13 for November-month contracts.The top five scrips with highest PCR on OI were Dr Reddy’s 2, ACC 1.98, Godrej Industries 1.63, Jindal Steel 0.95 and Aban Offshore 0.76.Among most active underlyings ICICI Bank witnessed an addition of 16.56% in the November month futures contract,followed by Reliance which saw an addition of 1.59% of OI in the near month contract.Tata Steel witnessed an addition of 3.65% in the near-month futures.Tata Motors saw an addition of 2.77% in the OI while Uco Bank witnessed an addition of 3.53% in the near month futures contract.

The coming week will be the eventful one as there are few important macro as well as micro economic events lined up.There will be only four trading sessions next week.The Reserve Bank of India’s (RBI) second quarter monetary policy review for FY11 is scheduled on November 02 (Tuesday). The apex bank of the country is expected to go for one more round of rate hike in its policy review to tame spiraling inflation. Besides this,all eyes will also be on the outcome of the Federal Open Market Committee (FOMC) meeting in the US which will be held over November 02-03.The US Federal Reserve is likely to take more monetary easing steps this time to boost the slowing economy.Technically too domestic indices seem to be on the back foot as we expect 5830-5850 could be the crucial support zone.Any drift below this may open the flood gates however next support could be around 5600.On the flip side if support remains Affermative,we might see some more bullishness in the upcoming sessions however 6295 will be very crucial to watch.HAPPY TRADING.