Market volume up 35% in 8 days

Foreign funds, operators ramp up holdings; 106 sectors gain in pre-Budget rally

Speculative buying seems to have started almost two weeks ahead of the Budget on July 8. Here is how: In the last 8 trading days, the average volume on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) has risen 35 per cent.

The big movers of the markets "" foreign institutional investors (FIIs) and operators "" are quietly increasing their exposure to the derivatives markets "" as is reflected in the surge in prices of index-based as well as non-index stocks.

The market as a whole appreciated by 6.38 per cent between June 23, 2004, and July 2. The Sensex had declined to a one-month low of 4644 on June 23.

During the period, the Sensex gained 4.88 per cent to close at 4870.78, the S&P CNX Nifty surged 6.32 per cent to 1537.50 and the BSE-500 appreciated by 6.70 per cent to close at 1959.06.

The length and breadth of the market rally in the last eight trading days is indicated by the fact that stocks of companies in 106 out of 111 industries classified by Business Standard Research Bureau were gainers.

The prices of three in every four stocks traded between June 23 and July 2 went up, while the market capitalisation recovered in this period by a whopping Rs 65,000 crore. Volumes on the BSE increased to a daily average of 32.82 crore shares in the last eight trading days, up from the daily average of 24.53 crore shares between June 1 and June 23. The daily average turnover soared to Rs 6,244 crore from Rs 5,055 crore.

FII participation in derivatives intensified in the first six trading days of the July contracts, compared with the first six trading days of the June contracts.

Open interest of the July contracts was up 15,800 compared with 2034 in the five trading days of the June contract. The buy contracts in July were higher by 17,306 than the sale contracts. The FIIs were net buyers to the tune of Rs 300 crore, up from a net buying of Rs 150 crore in the June contracts.

Operators' interest in July contracts increased considerably. The number of contracts, open interest and volumes jumped up.

Open interest was up by 3.89 crore shares in five days compared with 2.22 crore shares in June. The number of contracts surged by 65,000 compared with 20,000 in June.

The notional value of derivatives went up by Rs 2,07,714 crore versus Rs 34,102 crore in the first five trading days in June contracts.

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Position play

• Volumes on the BSE increased to a daily average of 32.82 crore shares in the last eight trading days, up from 24.53 crore between June 1 and June 23
• Daily average turnover soared by Rs 6,244 crore from Rs 5,055 crore
• FII participation in derivatives intensified in the first six trading days of the July contracts, compared with the first six trading days of the June contracts