Index futures draw premium over spot

F&O

Both the index futures continued to command premium over spot on account of short covering. The Nifty December futures closed at 4,877.35, at a premium of 19 points over the spot Nifty close of 5,858.

Open interest in the Nifty December futures declined further by 3.01 lakh shares on account of short covering. The Sensex futures too closed at a premium of 118 points as open interest increased by 24,775 lakh shares to 46,757 lakh shares.

Despite the positive advance-decline ratio, both in the spot and derivatives segments, spot indices closed with a negative bias as index heavyweights continued losing ground. The ratio for stocks futures was comfortable at 131:81 as long build up was seen in index lightweights.

The pattern formed during the last three days is indecisive, while the averages support the price move. The set-up on the weekly and monthly charts continues to be bearish, so it is still difficult to project new lifetime highs.

As indicated yesterday, the strong resistance for the Nifty was seen above 5,920. The Nifty December futures open on strong note at 5,886 and moved up to the day's high of 5,916 and closed at 5,877.35. Despite 2.81 lakh Nifty contract being traded on Tuesday, open interest declined by 6,025 contracts indicating profit booking at higher levels and short covering at lower levels.

The Nifty implied volatility has declined to 30.35 points as the derivative players were seen buying in the money calls.