Markets last week

OPEN INTEREST OUTLOOK

The rollover was 5.3 per cent in case of Nifty futures and 17.6 per cent for Nifty Mini. The stock futures that have witnessed healthy rollovers are Indian Hotels (16.8 per cent), Unitech (10.2 per cent), Rajesh Exports, Siemens, Glaxo and Shipping Corp (10 per cent each). Reliance Petroleum, Infosys Technologies and NIIT saw 5 per cent rollovers.

SECTOR ANALYSIS

Banks, automobile, metals, oil and gas and select pharmaceutical stocks witnessed short covering last week. Cement, information technology and telecom futures have witnessed the creation of shorts.

Long positions were seen in AIA Engineering, Unitech, Tata Steel, Indian Bank and Canara Bank. The open interest in these stock futures moved up by over 10 per cent each, accompanied with a rise in future prices, hinting at further upward movement in the coming week.

The stock futures that witnessed short covering during the week were Gateway Distripark, HPCL, Bajaj Hindustan, India Infoline, HCC and Bharat Electronics.

PUT-CALL RATIO

The Nifty PCR declined further last week, from 0.95 to 0.89 per cent, as Nifty Call options added OI of 38.49 lakh shares (33.24 per cent) and Put options added 27.57 lakh shares (25.0 per cent).

The Nifty PCR remained below 1, which shows that the markets remain oversold. Call options buying was seen at 5,000-5,200 strikes, indicating support. Call writing took place at 5,400, revealing resistance at this level.

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.

STOCK OF THE MONTH: Essar Oil

Week's close (Rs) 234.90;
Previous week's close (Rs) 175.90

The shares of Essar Oil ended the week with gains of 12 per cent, accompanied with a huge open interest increase in the futures and options market.

The recent hike in petroleum prices cheered the market, leading to buying in refining and marketing stocks. There was an announcement last week that the company will be added in the MSCI Emerging market index from March 1. In the December 2007 quarter, the company's net sales grew 7.3 per cent.

However, it incurred operating and net loss of about Rs 15 crore and Rs 13.4 crore respectively. The stock is down more than 20 per cent in the last one month, thanks to the volatile market conditions.