Lightest markets in a year

CNBC-TV18's Head-Markets Research, Anuj Singhal : As I write this piece, the next month Open Interest is at Rs 29,000 cr. Assuming we will add around Rs 10,000 cr owing to rollovers, we will still begin the next series at around Rs 40,000 cr which will be lowest since May 2007. You could read it both ways. Bulls will say, markets are absolutely clean of froth and bears would say there is absolutely no confidence in the markets.

The Nifty rollovers have been particularly low this time at just around 52% compared to an average of 70% that we normally see by the penultimate day. But an important pointer is consistent FII buying in Nifty futures and April futures trading at a higher premium than March. The combination of these 2 suggests that the bias of rollover is on the long side and shorts are actually booking profits, having made decent money.

There are a couple of year-end considerations also. Today and tomorrow are technically the last 2 days of this financial year as we follow the T+2 system and I won’t be surprised if we see sudden uptick in volumes as a lot of traders would book capital losses and buy shares back. This would be handy for those who would have made big capital gains earlier and would offset some of them with the current losses to save short term capital gains tax. Also from next year, the short-term capital gains tax goes up to 15%

As far as today’s trade is concerned, I think it would give traders ample trading opportunity. The global markets are weak this morning and as such a gap down is expected. But the force of FII flows over the last few days has changed the sentiment a bit. Also a lot of Puts have been written at 4800 and we have all seen the kind of movements last hour of trade brings on the expiry day. So I won’t be surprised one bit if Nifty attempts to close above 4800 and there is some green during intra-day trade.

As far as stocks are concerned, watch out for SAIL and Axis Bank. SAIL has seen low rollovers and has fallen quite a bit while Axis Bank has participated the least in the private sector banking rally of last few days.

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.