There is constant unwinding happening on momentum stks

CNBC-TV18's, Research Analyst, Varinder Bansal : The important thing is that as and when the Nifty goes near 4,200, we are seeing short covering happening and that is the reason why you are seeing that June has entered into the premium. It was the case when in the early morning also, when the market opened deep in the red that slowly and slowly people were booking some of the profits and that is why there was a premium which was seen in the June series. There is constant unwinding which was happening on most of the momentum stocks and even if you just see in the banking stocks particularly some specific stocks are seeing short rollover but particularly ICICI Bank and HDFC Banks are the two stocks, where we are seeing some kind of a long build up happening in the next series.

But if one has to take stock by stock Reliance Industries is one stock to focus on, where we are seeing that there are shorts, which are continuing to build Rs 2,120 was very important level and after that we had seen initiation of short positions on this stock but as the stock approached that Rs 2,000 levels, we did see some short covering happening and one can see the stock is trading at Rs 2,050 levels. We have also seen that the net OI changes only if 6 lakh shares, which is being covered after the short covering.

Suzlon is one counter which is continuously facing resistance and the rollover is around 20% on the stock and we had seen a net addition of nearly 18.8 lakh shares, mostly on the short side 18 lakh added in the next series and the stock is down nearly Rs 8. The stock has been under pressure since post result when the stock was trading around Rs 320.

JP Associates is a stock which is having a rollover of nearly 22% and we have seen again in the July series around 17 lakh shares being added and the rollover at 24% and the stock is down nearly Rs 10. But at Rs 150 the base level there are people who could come ahead with some of the short covering in the stock.

Cairn India as rightly mentioned that the stock is continuously seeing long rollover happening at around 20-25% and the total net OI interest is around 21 lakh shares but the important is the July series, which is adding nearly 20 lakh shares.

Important is all the momentum stocks, which was mentioned IFCI is continuously shedding 22 lakh shares in the OI, the net changes around 8 lakh shares but short rollover happening on all the momentum stocks.

Q: Speaking of the stock the big guy on which you are seeing a build up of short positions Reliance and its performance is going to start showing up and lot of the funds that you track as well?

A: Yes, right we have been raising this question of when it was JP Associates or GMR Infra, which clearly you can see when these stocks were over owned in the mutual funds space. Even one sees the same case for Reliance Industries which slipped below Rs 2,000 for the first time since September 12, 2007 and also the stock is down nearly 38.5% from its all time high of nearly Rs 3,250.

If you just see in the mutual fund pack you will see that this is one of the stocks which is mostly over owned in the industry. Reliance Industries, nearly 253 schemes are having the stock in their portfolio which is followed by BHEL around 207, Bharti and ICICI Bank nearly 197 and L&T nearly 190. The most important statistics here is and if one just checks out that out of the total corpus of the mutual fund industry, which is only in the equity segment nearly 5-6% is held only in Reliance Industries as I said that most of the schemes are having Reliance Industries in their portfolio, number of schemes having exposure of more than 5% are nearly 137 and number of schemes having exposure of more than10% are around 26. These are mostly the index based schems and all the marquee names you count on your fingers whether it is ICICI Prudential, Reliance Div Power, Reliance Natural Resources, DSPML T.I.G.E.R, Stanley growth fund, Fidelity Equity, Reliance Equity all these schemes are having higher weightage in Reliance Industries. So it is a clear example of over ownership but may be that was one of the reason why we saw the stock just plummeting down from Rs 2,500 to below Rs 2,000 mark and that was the same case which we noticed in GMR Infra and JP Associates.