Indicators like foreign funds buying in both futures and options, Nifty May ending in premium, and Nifty May put-call ratio increasing to 1.29 from 1.25 point to a further rise in Indian stocks on Thursday. However, a fresh spurt in oil prices and global cues will weigh on sentiment. In this catch-22 situation, markets will remain volatile ahead of F&O May series expiry.
US markets were volatile Wednesday. However, stocks ended in the positive territory on pullback in oil prices and data that showed new orders for long-lasting US manufactured goods fell less than expected. Crude oil price rose more than $2 a barrel after Morgan Stanley said Brent oil from the North Sea could easily reach $150 a barrel. Oil rose as high as $131.32 on New York Mercantile Exchange.
Back home, Indian stock indices ended firm Wednesday after moving between negative and positive territory in first half of trade. The recovery was led by frontline stocks on short covering ahead of May F&O expiry, positive cues from European markets and fall in crude oil price.
Nifty May futures contract ended in a premium of 13 points to the spot. The contract price jumped 1.83 per cent on short covering. According to NSE data, Nifty May contract shed 17 per cent in open interest. The cost of carry turned positive as traders covered their shorts. The rollovers to Nifty June futures stood at 57 per cent.
Unwinding of positions was seen in Nifty 4800-5100 calls while 4950 and 4850 calls added some positions in open interest. Also, positions were unwound in puts. However, 4850 put added 90 per cent in open interest. June expiry of Nifty puts 4800 and 4700 added significant positions in open interest, which gives us the support level in near term.
In stocks futures, long positions were built in Arvind Mills, Bharti Airtel, Bombay Dyeing, Bharat Petroleum, BRFL, DLF, Federal Bank, GAIL, Grasim Industries, HDFC Bank, Hero Honda, Hindalco, Hindustan Oil exploration, Hindustan Unilever, I-Flex solutions, ICICI Bank, Idea, IDFC, India Cement, JP Associates and Reliance Capital.
Total F&O turnover on NSE was Rs 56,333 crore, up 13 per cent. India VIX settled at 32.63, up 14 per cent from Tuesday. Foreign institutional investors net bought futures, both index and stocks, worth Rs 757 crore and net bought options of Rs 743 crore.