F&O WATCH: Keep an eye on NTPC

What is Open Interest?

Open Interest (OI) position in futures and options indicate market-wide participation of derivative players. An increase in open interest with call-put ratio of less than one indicates oversold positions for the markets where as the call-put ratio above one indicates overbought position for the market.

What happened last week?

The market view still remains bullish, but caution is advised on account of high volatility at peak levels. The market witnessed heavy buying from Monday-Wednesday, and significant profit-booking on Friday.

The Nifty April futures fluctuated wildly intra-day on Friday as bouts of buying & selling was noticed through the day. The series closed at 3458.15 when compared to the spot Nifty close of 3454.80.

Open interest in Nifty futures increased by 4.44 million shares to 28.94 million shares. Nifty 3400 put options have added OI of nearly 17 lakh shares, and 3400-level would thus be a significant support level for the Nifty.  Increase in volume & heavy build-up in Nifty 3500 call options suggests that Nifty may face some resistance at those levels.

The put-call ratio (PCR) of Nifty moved up sharply to 1.55 from 1.19 the previous week as call options added nearly 5.4 lakh shares (9%) and put options added 29.6 lakh shares (42%) in OI.

OI in the banking sector has been quite high with BoI (128%), Corporation Bank (82%), HDFC (85%) and IndusInd (40%) recording huge additions.

Satyam (182%), TCS (42%), HCL Tech (39%),  Aurobindo Pharma (39%), Cipla (77%), Cochin Refineries (96%), Hero Honda (103%), Neyveli Lignite (47%) and TVS Motors (339%), too, recorded substantial increase in OI.

The call options of NTPC have witnessed a huge addition of nearly 26 lakh shares, which indicate that operators are bullish on the stock.
 

OPEN INTEREST		(In million)
Underlying	7-Apr	5-Apr	4-Apr	3-Apr	31-Mar
Nifty	45.19	43.22	41.71	39.01	38.14
ACC	6.33	5.22	4.87	4.82	4.69
Infosys Tech	3.39	2.53	2.49	2.67	2.73
Satyam Comp	9.76	4.65	3.48	3.40	3.29
Tata Steel	16.41	16.01	16.11	15.27	14.38
Tata Motors	5.84	5.27	5.40	4.87	4.71
Reliance Ind	19.17	18.54	17.93	17.30	16.84
Total	1132.47	1111.24	1068.78	1016.25	985.21