Stock markets last week

Domestic Market: After Black Monday (Sensex was down 617 points and Nifty 188 points), the indices ended higher for three straight sessions on the back of buying across sectors. However, the rally was not enough to make up for Monday's losses. Barring the BSE Metal and Consumer Durable indices, all other sectoral and benchmark indices ended in the red.

Nifty Snapshopt: S&P CNX Nifty declined 69.55 points last during the four trading days of last week to close at 3752. Nifty futures traded at discount to spot Nifty in all four trading days of last week. Nifty near-month futures were bought heavily on Black Monday, adding open interest by 6.20 million shares over Friday's level. However, open interest declined by 5.64 million shares as operators booked profits subsequently as markets recovered in the next three trading sessions. The Nifty discount to spot rose to 44 points mid-week and narrowed to 26 points at the end of the week.

Open Interest Outlook: After a weak rollover last week, Nifty near-month contracts added open interest of 2.38 million shares in the first week of new expiry. In the first week of March expiry, open interest rose by 7.44 million shares. In the first week of March, expiry short positions were created as Nifty fell sharply by 237 points . During the first week of April expiry, an increase in open interest on Black Monday indicates short covering at lower level.

Market Position: Open interest (OI) in futures and options contracts on a stock is capped at 20 per cent of the free-float holding. If the OI 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 - Auto and ancillary: Avoid. Short position was seen in M&M, Hero Honda, Tata Motors and Ashok Leyland. Banking & Finance: Short positions was seen in key stocks such as ICICI Bank, SBI and UTI. The OI in these banks increased over 10 per cent, while the market declined by around 4 to 8 per cent. Cement & Construction: Avoid. IT & Telecom: Avoid. Infosys FY07 results on April 13 will set the trend. Metals: Buy positions seen in SAIL, Tata Steel and National Aluminium. Keep a close watch for fresh build up. Oil, Gas & Refinery: Bullish on RPL. HPCL looks strong.

Put-Call ratio: Nifty PCR (OI) is currently at 0.87 compared with 0.91 in the previous week. OI in Nifty call options up 41.4 lakh shares +41.1 per cent) and put options up 32.37 lakh shares (35.43 per cent) during the week. Call writing was done at a strike price of Nifty 3700, which indicates free fall if the Nifty declines below that level. Put options added 28.7 lakh shares, which is 89 per cent of total OI built up in put options.

FIIs investment in emerging markets: Foreign institutional investors were net sellers in India and Vietnam while making modest purchases in all other emerging markets last week. FIIs bought $ 650 million and $623 million worth of shares in Taiwan and South Korea. They were net sellers in all four trading days of last week in India, taking their net sales to $150 million. Among other emerging markets, FIIs were net buyers in Indonesia ($116 million), Thailand ($203 million) and Philippines ($85 million).

FIIs in Derivatives: Cumulative FII positions, as percentage of total gross market position in the derivative segment, as on April 5 was 37.34 per cent. At the end of last week, FIIs were holding 7.15 lakh contracts of index futures and 5.75 lakh contracts of stocks futures. They were net sellers in index futures and net buyers in stocks futures. Trading volumes in F&O declined last week to an average of Rs 4,400 crore from Rs 10,200 crore in the previous week.

FIIs to FIIs trade: The six-lakh series of the BSE and the LS series on the NSE, allows 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, then FIIs can buy among themselves within the overall limit at this counter.

Global markets: European stocks rallied last week as mergers and acquisitions offset concern that economic growth in the US is slowing, lifting the Dow Jones Stocks 600 Index to within two points of a six-year high. Europe's Stoxx 600 Index climbed 1.6 per cent this week to 380.26. France's CAC 40 rose 1.9 per cent, while Germany's DAX jumped 2.6 per cent. The UK's FTSE 100 advanced 1.4 per cent. US stocks fell this week, sending the Dow Jones Industrial Average to its first quarterly loss in almost two years, after Federal Reserve Chairman Ben S Bernanke said inflation remains his main concern even as evidence mounts that the economy is slowing.

Stock of the week: Gujarat Ambuja Exports
Last week close: Rs 31.10; Previous week close: Rs 26.25

Gujarat Ambuja Exports, manufacturer of refined, hydrated and hydrogenated castor oil, jumped by 16 per cent after it announced a share buyback at Rs 38, 26.6 per cent premium over its Friday's closing price. The company has set aside Rs 26.25 crore for the buyback, which will begin on April 16.

Meanwhile, the company has lined up a Rs 325 crore massive expansion which entails maize-based ethanol and extra- neutral alcohol (ENA) plants at Nashik. The units will be operational by September 2007.The company has been a significant outperformer compared with Sensex. Yet it trades at 9.7 times on the basis of annualised nine-month earnings for FY07.