Stock markets last week

After two days of low activity, markets rallied on Wednesday. The next day, markets opened with an upward gap and remained at similar levels till Friday. The Sensex closed the week 3.68 per cent higher, while Nifty gained 3.38 per cent. The rally was more broad-based as the BSE 100, BSE 200, BSE 500 and BSE Midcap gained more than the Sensex.

Nifty snapshopt
As stock markets turned bullish, the Nifty futures traded at a premium to the cash Nifty. On Wednesday, when the cash Nifty closed 50 points higher, the Nifty future traded at a premium of 18.1 points. By the end of the week, the premium had halved. However, markets are getting bullish as the premium is higher than the 2.4 points last week.

Open interest outlook
There was a decline in the Nifty futures open interest position last week over previous week of 43 lakh shares to 32.7 million shares. Last week, Nifty futures open interest was up at 37 million shares as compared with 33.16 million shares in the previous week. With the index rising, this indicates that some profit-booking took place last week.

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

Sector analysis
Except for autos and IT, all the sector indices closed positive. Bankex continued its uptrend with a phenomenal 10 per cent increase, while oil and gas was up 5.76 per cent. Healthcare, metals and capital goods went up, but were slower than the Sensex. In terms of sectors, FMCG was the only sector where the open interest reduced.

Sectors like 'others, diversified, oil and gas and fertilisers saw large increases in open interest. Coming to stocks, there was a large build-up in the Patni Computer open interest as there could be a stake sale. Open interest in Bajaj Auto also went up after the news of the demerger.

Put-call ratio
The Nifty put-call ratio of open interest increased phenomenally from 1.14 to 1.46. However, the Nifty put-call ratio of contract also increased from 0.93 to 1.11. In the stock put-call ratio, there was a fall from 0.23 last week to 0.22 this week.

FIIs investment in emerging markets.
Overseas investors bought $169 million of Indian shares, based on the provisional figures provided by BSE and NSE. FIIs were net buyers on May 14, 17 and 18, while they were net sellers on May 15 and May 16. Overseas funds bought $1.3 billion in emerging markets stocks last week, of which $1.15 billion was in Japan. In Taiwan, funds exited $450 million.

FIIs in Derivatives
Total gross open interest position of FIIs stood at Rs 38,382 crore on May 18 as compared with Rs 37,394 crore a week earlier. As on May 18, the FIIs were holding 6.68 lakh contracts of index futures and 6.59 lakh contracts of stocks futures. In the index options holdings, they owned 2.8 lakh contracts.

FIIs to FIIs trade
The six-lakh series on the BSE and the LS series on the NSE allow FIIs to sell or buy scrips among themselves for those companies in which maximum ceiling for the overall FII investment has been attained. Simply put, when a company hits the FII ceiling, fresh buying by FIIs is capped but one FII can always buy from another FII within the overall limit.

Global markets
There was a rally in global markets, more or less, across the board. The S&P 500 gained 1.12 per cent, the Dow Jones was up 1.13 per cent helped by the rise in consumer confidence and Microsoft's acquisition of Aquantive.

The European markets were stronger. Austria gained 3.24 per cent while Turkey was up 2.8 per cent. Emerging markets were quite strong, with many markets gaining over 2 per cent; these include Argentina, Brazil, Hong Kong, Indonesia and Philippines. The ongoing rally in China slowed down as metal prices slumped. Japan declined as companies missed their earnings forecast.

STOK OF THE WEEK: State Bank of India
Last week's close (Rs) 1325.75 Prev. week's close (Rs) 1149.20
The State Bank of India stocks advanced nearly 15.4 per cent last week as it witnessed a sustained post-Q4 results rally. The premier public sector bank of the country fared better than expected in the quarter ended March 2007.

While its net profit jumped up nearly 75 per cent to Rs 1493.2 crore, its topline grew 29 per cent to Rs 14435.8 crore. On friday, the stock closed at Rs 1325.75, though it reached a high of Rs 1338.8 in intra-day trading.In the previous month, the scrip advanced nearly 26 per cent, and is at present trading at 3.8 per cent discount to its 52-week high of Rs 1378.7, reached on December 4, 2006. The scrip's 52 week low was Rs 684.15 and the stock is currently trading at a 93.7 per cent premium to this level.