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Derivatives

Derivatives

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Published by Shahid Shaikh

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Published by: Shahid Shaikh on Sep 16, 2010
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09/28/2010

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DERIVATIVES
Key Highlights
In the month of July 2010, the markets started on a shaky note but soon the bulls took chargeand the benchmark indices made a one-way upmove to close significantly in the green. TheNifty closed the month at 5367.60 rose by 1.04%Nifty August 2010 series witnessed higher rollover compared to previous two months rollovers,rollover of 72% compared to 69% and 65%. Most of them on long side, indicates we could seesome more upside in Nifty in forthcoming trading session.Coming to stock specific rollovers, the highest rollovers were seen in GTL, KS Oils, Glaxo,Century Textiles and Balrampur Chini. The lowest rollovers were seen in BGR Energy, ABB,Rolta, Union Bank and GAIL. Average daily turnover in F&O segment stood at Rs 83,177.77 crore in July, a decrease of morethan 10% from last month.
The markets started the month of July series on a weak note on the back of weak global cues. However,the fall was less than their global counterparts. The market surged from the second week ending July 09as a hike in 2010 global growth forecast from the IMF, revival of monsoon rains & expectations of strongQ1 June 2010 corporate earnings, boosted investor sentiments. The IMF raised its India growth forecastfor 2010 to 9.4% from 8.8% estimated in April. Markets remained strong throughout the july series, onthe back of sustained buying by foreign funds, raising of Indias growth forecast by IMF, revival inmonsoon & decent first quarterly earnings.
 
B
usiness Growth in F&O SegmentThe total number of contracts for the month of July stood at 6,77,56,807 while in the month of Junethere were 7,70,78,089 contracts. The total turnover in F&O segment for the month of July stood at Rs18,29,910.06 crore as against Rs. 20,35,598.98 crore in the month of June showing decrease of 10.10%.Further, there was also decrease in the average daily turnover to the amount of Rs 83,177.77 crore inthe month of July .Nifty August 2010 series witnessed higher rollover compared to previous two months rollovers, rolloverof 72% compared to 69% and 65%. Most of them on long side, indicates we could see some more upsidein Nifty in forthcoming trading session. Though Nifty has rallied higher upto 5477.50 mark in previousexpiry, from here further upside will totally depend on distribution of Monsoon throughout country.Lower than average monsoon could result in higher inflation which could forced the central bank R
B
I toincrease the key interest rates further to tame the inflation which could impact the economy growthrate. From here future movement of Nifty will remain totally depended on monsoon and movement of its global counterparts. If all remains well then we could see upside in Nifty probably upto 5500-5600mark otherwise not ruling out the probability of major correction in Indices and Stocks. At the globalfront also European sovereign debt crisis and slow economic recovery of US will remain a major concernwhich could jolt the market in near term. In forthcoming trading sessions expecting Nifty to remainrange bound in between 5320 and 5470 in short term and 5200-5500 in medium terms.
B
ank Nifty also witnesses higher rollover of 83% compared previous two rollovers of 74% and 72%respectively, most of them were on long side. Though banking sectors stocks has already rallied and
 
most of the stocks are trading close to new year high still expecting some more upside in them inanticipation of easing of inflation and continuation of higher credit demands from rural and urban areas,which could take stocks and indices to another new high. On the other side CNXIT witnessed lowerrollover. Rollover of 40% compared to previous two months rollover of 71% and 57%. Lower rolloverindicates we could see correction in stocks of IT sectors on account of lower than expected resultreported by IT giants Infosys and poor future guidance.
Put-Call Ratio 
The put-call ratio witnessed volatility in the month of June. In the first few days of July, put-call ratio of open interest decreased to 0.87 levels. The Put call ratio jumped from second half of the month due toaggressive writing in 5300 and 5400 put option.Volatility Index

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