Action shifts to stocks

CNBC-TV18's Head-Markets Research, Anuj Singhal: After a long time we saw Futures adding over Rs 1,000 crores of Open Interest and that despite Nifty futures Open Interest not changing. The fact that stock futures added over 1 crore shares in Open Interest with prices moving u clearly indicates that action is slowly shifting to stocks after its become clear that Nifty is not moving out of this narrow range in any hurry

Wednesday saw build-up in midcap IT and sugar stocks. There was also sporadic buying in couple of power stocks. You might see a trend where some other sector sees traction as we are now in a market where traders would tend to book profits and move on to some other beaten down stocks.

As far as Nifty is concerned, there are signs of fresh shorts, especially by FIIs. Its perfectly explicable as we face 3 potential market mover events. There is IIP data, inflation numbers and the Infosys guidance. So there is a possibility of some value buying in stocks and hedging it by shorting the Nifty. It may also explain the discount we saw in Nifty futures after a long time

Orchid was the top traded counter and what a roller coaster ride it was for the stock. Up about 4% in early trade, then down 10% and finally closing down only 3%. In between, a lot of Open Interest got cut as the sense prevailed that it might have had its run

BHEL saw short covering for second day running and now the stock is u p 9% for the week. But this has been a pure short covering rally as its been accompanied by nearly 25% Open Interest cut. This was coming after the 22% fall the stock had last week. But this stock too may have run its course as normally short covering rallies don’t take individual stocks beyond 50% of lost ground and BHEL is approaching that level.

One stock, which is under tremendous pressure, is SAIL. Its now down 33% in one month. That’s a third of market cap erosion in a matter of few trading sessions. Worse still, even on days, its peers rally, this one is sulking. Would be interesting to see if it follows BHEL and sees some short covering from oversold ground and gives a technical bounce

DISCLAIMER: The author is not allowed to trade in equity markets including Futures and Options. His only exposure to capital markets is via shares of TV18 and Network18 granted to him as ESOPs by the company and investments in some long-term mutual funds.