Risk-reward turning positive

CNBC-TV18's research analyst, Anuj Singhal - It really was a disappointing closing on Wednesday. The markets were building nice gains but the last hour of trade put paid to hopes of a breakout ahead of budget. However as we enter the expiry week, I will maintain my stance that bulls seem to have upper hand and markets look in good shape. While in the event of positive triggers from budget and global cues the upside looks strong, the downside looks limited even if global cues were to turn bad.

Of course it's expiry day, so you would expect some bout of volatility but looking at these stats, I cannot remember any expiry day, which looked healthier than this in recent past. Just presenting the numbers below.

Expiry day stats  Feb series     Jan series

Total Open Int      Rs 82,112 cr  Rs 91,409 cr
Current mth
Open Int              Rs 36,850 cr  Rs 48,591 cr
Next mth
Open Int              Rs 45,262 cr  Rs 42,818 cr

Next month futures positions on expiry day

• Total: 84 cr shares vs 81 cr shares
• Nifty: 3.1 cr shares vs 2.7 cr shares
• Stocks: 81 cr shares vs 78.3 cr shares

Rollover (%)   Feb   Jan

Marketwide      68      57
Nifty                69      66

Easy inference - Markets are sitting on positions worth Rs 36,000 odd crore which are to be rolled over, of which stock futures positions are just around 18,000 crores. Clearly the room for huge rollover related fall is limited.

In individual stocks, one has to watch out for infrastructure and power stocks. Over last couple of days there has been some traction in these stocks and some positions have been added on the long side. IRB Infra and Siemens stand out. Reliance Power though is struggling to cross its issue price convincingly. Its making efforts to cross that wall but that is consistently met by selling and unwinding.

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.