The disparity in the futures and the spot market due to the uncertainty prevailing in the markets seems to be increasing on the back of the huge short built-up created in the markets.
The Nifty July futures contract ended the day with a discount of 49 points as against a discount of 37 points in the previous trading session. This coupled with the huge participation in the Nifty put contract at a strike price of 3,700 and 3,800 levels is true indication of the investors bearish sentiments towards Indian markets, dealers said.
The Nifty July futures ended the day at 3,980 points added 32 lakh shares to the open Interest (OI) at 4 crore shares. Also the Nifty Open Interest (OI) Put call ratio, which is the measure of bearishness in the market, increased from 1.09 to 1.19 on Monday. Even the foreign institutional Investors (FIIs) which have been net sellers of Indian equities, have been net buyers at around Rs1,814.31 crore in the derivatives segment since the beginning of the July contract.
Viral Mehta, Manager, F&O, Mehta Securities, said ?The put options with strike price of 3,800 and even 3,700 are attracting volumes clearly indicating the bearish view prevailing in the markets. In a normal market, by this time of the contract period, the premium for the Options contract would usually settle down but this time the it has moved to higher levels. Also, with every rise, especially once the corporate results start pouring in, investors would start covering their short positions adding to the volatility in the markets.?
Meanwhile, the benchmark Sensex of the Bombay Stock Exchange (BSE) opened in the positive terrain on the back of some relief from the domestic political scenario but pared all its early gains in the last one hour of the trading session to end the day with a marginal gain of 71.99 points or 0.54% to close at 13,525.99 points. However the broader S&P CNX Nifty managed to close the day above the 4K level at 4,030 points for the second consecutive day at 4,030 points posting a gain of 14 points or 0.35%.
Rumors that government might impose wind fall tax on the super profits made by the private sector refiners dampened investor?s sentiments in the counter of Reliance Industries Ltd (RIL) and Reliance Petroleum Ltd (RPL). Cairns India also bore the brunt. However, anticipation of better results from the Information technology giant Infosys kept the hopes floating, dealers said.
The participation in the broader markets led the overall markets breadth at the BSE to remain positive with 1,853 stocks advancing as against 788 stocks that declined and 65 stocks remained unchanged. Value picking in the small and the mid cap stocks led their indices to out perform the Sensex gaining 143.34 points and 61.57 points respectively. The indices finally managed to close the day at 6,593.01 points and 5,339.81 points respectively.