Stock markets last month

The momentum witnessed in the cash markets was also observed in the derivatives markets on expiry day as almost 80% positions in Nifty futures were rolled over. Though the Nifty gains during May series were low at 2.8%, they came on the back of the UP poll results and fears of a fall as the markets were near new highs. In May the markets didn't fall as in the past, but went on to scale new highs on the Nifty.

MARKET POSITION
Open interest in futures and options contracts on a stock is capped at 20 % of the free-float holding. If open interest hits over 95% of the MWPL (market wide position limit), fresh open interest is restricted, and the underlying stock can only be bought in cash markets or from a seller in the derivatives market.

Sector analysis
Among sectors, banking, metals and telecom seem to be on a strong wicket from the F&O data. Bank stocks witnessed strong rollover as was the case in Bank Nifty. Most metal stocks also saw good rollovers. IT and telecom stocks as well as CNX IT have entered June with strong rollovers indicating bullishness. Patni Computer has seen a phenomenal increase in open interest along with a price rise. The open interest positions in Chennai Petro, GE Shipping, Tata Chemicals and United Spirits have increased along with price appreciation. In Bajaj Auto, Dr Reddy's and Infosys, open interests have increased but with a price decline.

Put-call ratio
The Nifty open interest put-call ratio increased from 1.53 last week to 1.62. On expiry day, it was 1.51. The Nifty put-call ratio was also up at 1.15 compared with 0.99 last week and similar levels last month. The stock put-call ratio declined to 0.15 against 0.23 last week. The implied volatility in Nifty June options declined to 21-22 per cent against 23-24 per cent in early May, suggesting that sentiments are improving.

STOCK OF THE MONTH: SREI Infrastructure Finance
Last month's close (Rs) 86.23 Prev. month's close (Rs) 57.88

SREI Infrastructure Finance has gone up by 49 per cent in the last one week on the back of its equal-stake equipment finance venture with BNP Paribas. The stock hit the upper circuit in the last two trading sessions following the announcement.

The joint venture will not only help the company in strengthening its leadership in infrastructure equipment finance but also expand the product line into financing of agriculture, information technology, and medical equipment. With the current spike in its stock price, the company has given a staggering return of 56 per cent in one month.