Markets last week

Indian markets moved ahead for the second consecutive week on healthy results posted by the software sector and engineering companies. The BSE Sensex and S&P CNX Nifty closed above the psychological resistance levels of 13,800 and 4000 respectively, on buying support. The Sensex registered a weekly gain of 513.33 points to close at 13897.41, while Nifty rose 166.2 point to 4083.55.

Nifty Snapshopt

Nifty futures traded at a discount to spot Nifty during all the five trading days. However, the discount reduced to around seven points towards the end of the week as the market witnessed short covering by the bear operators. On Monday and Friday, the bulls had the upper hand as the Nifty posted a 96-points gain on Monday and 86 points on Friday.

The near month Nifty futures saw a decline of 8.67 lakh shares, while the May month futures added 45.33 lakh shares.

Open Interest Outlook

Nifty futures added 37.58 lakh shares in open interest, taking the overall OI position to 42.10 million shares. The ten per cent increase in OI, coupled with the rise in Nifty futures, indicates buy positions. The Nifty 4000 Put and Nifty 4100 Put have added OI of 32.45 lakh shares, indicating strong support at these levels.

Market Position

The OI in futures and options contracts on a stock is capped at 20 per cent of the free-float holding. If the OI position crosses 95 per cent of MWPL (market wide position limit), fresh positions are barred, and the underlying stock can only be bought in the cash market or from a seller in the derivatives market.

Put-call Ratio

The Nifty put-call ratio (PCR) of open interest (OI) has moved up to 1.31 compared with 1.06 during the previous week. Nifty call options added 11.19 lakh shares (+7.03 per cent) & put options added 46.68 lakh shares (+26.4 per cent) in OI during the week. Nifty 3,800-4000 put options had over 112 lakh shares in OI, representing 50 per cent of the total put OI. Therefore, the market is not expected to fall below these levels.

FIIs In Derivatives

The cumulative FII positions as a percentage of the total gross market position in the derivative segment as on April 19, 2007 is 36.50%. It was at 35.95 per cent as on April 12. The total gross open interest position of FIIs stood at Rs 43,194 crore as against the market wide gross position of Rs 116,600 crore. As on April 20, the FIIs were holding 8.37 lakh contracts of index futures and 6.48 lakh contracts of stocks futures.

FIIs Investment In Emerging Markets

Overseas investors net bought $352 million Indian shares during the week ended April 20, based on the provisional figures provided by BSE and NSE. FIIs were net buyers on April 16,17,18 and 20, and net sellers on April 19. Overseas funds bought Rs 113 crore of stocks in the emerging markets last week. The overseas inflows were the highest in South Korea at $558 million, followed by India at $352 million and Thailand at $92 million.

Global Markets

The Dow Jones Industrial Average rallied after earnings from companies such as Caterpillar and Google topped estimates. Honeywell International and American Express also helped extend the best April advance in four years, after profits signalled that the global economic growth remains strong. The Standard & Poor's 500 Index and the Nasdaq Composite Index rose to six-year highs. In the last five days, the Dow has risen 2.8 per cent, the S&P 500 has climbed 2.2 per cent and the Nasdaq has advanced 1.4 per cent. For the month, the Dow has surged 4.9 per cent and the S&P 500 has rallied 4.5 per cent.