Stock markets last week

Stock of the week - Mahindra Forgings: Last week's close (Rs) 326.60 Prev. week's close (Rs) 227.70.

Mahindra Forgings (MFL) leaped by 43 per cent following its announcement of the scheme of amalgamation of the group companies namely Mahindra Stokes Holding Company (MSHCL), Mahindra Forgings Overseas (MFOL) and Mahindra Forgings Mauritius (MFML) with the Company with effect from April 1, 2007.

Mahindra & Mahindra shareholding in MFL is expected to increase from current 47.1 per cent to 60.6 per cent. The merged entity's sales and EBITDA will jump 10 times to Rs 2001 crore and Rs 245 crore respectively.

Thus, the stock traded at an attractive valuation of nine times for FY07, leading to skyrocketing performance on the bourses. Mahindra Forgings manufactures forged automotive parts like crank shafts, connecting rods and stub axles.

Open Interest Outlook: The momentum witnessed in the cash markets was also observed in the derivatives markets on expiry day as almost 80% positions in Nifty futures were rolled over.

Though the Nifty gains during May series were low at 2.8%, they came on the back of the UP poll results and fears of a fall as the markets were near new highs. In May the markets didn't fall as in the past, but went on to scale new highs on the Nifty.

Sector analysis: There was a huge build up of short positions in the automobile, banks and finance, cement, entertainment and refineries sectors last week as OI in these sectors moved up while their market values retreated sharply.

The IT stocks, however, witnessed strong support at lower levels as seen in long positions along with upward movement in market prices.

The major gainers during the week, in terms of price and increase in open interest, were Financial Technologies, Hindalco, Punj Lloyd, Aurobindo Pharma, Peninsula Land, Aban Lloyd, Dena Bank, Praj Industries, I-flex, GTL, Suzlon, etc. Major losers were Ansal Infrastructure, Tata Motors, Hinduja TMT, Tata Tea, Birla Corporation, Escorts, Titan, HPCL, ACC, Unitech, SAIL, OBC, Maruti, Sobha, Bata, PFC and Tata Steel.

Put-call ratio: Nifty call options added 53 lakh shares (+62.5 per cent) and put options added 42.5 lakh shares (30.8 per cent) in OI on a week-on-week basis. The Nifty 4100 put options added 14.25 lakh shares in OI during the week and now holds 34.3 lakh shares in OI representing 19 per cent of the total put OI options.

The Nifty 4200 call options added 13.9 lakh shares and 4300 call added 11.9 lakh shares in OI. The 4200 levels should act as the resistance level in the coming days

Market Position: 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.