Unlike the previous rallies, the benchmark indices Sensex and Nifty touched its all-time high on Tuesday with broader participation from side counters. Investors? interest in side counters is in evidence even in the National Stock Exchange?s derivative segment where individual stock futures are witnessing build-up of huge open interest positions compared to Nifty futures.
According to market players, a broader participation from stock futures coupled with positive global cues would help the market touch new highs on a sustainable basis. The total open interest in individual stock futures stands at around 70,000 crore shares which make up around 65% of the total market wide position.
Sailav Kaji, head-derivative & strategy, PINC Research, said, ?When the market is highly volatile, investors prefer to bet on Index futures. In recent times, however, with the market less volatile, the derivatives segment is witnessing more stock-specific actions, which is driving the prices higher. The absence of a contrarian view at present would help the market consolidate at higher levels.? With the investors moving over to individual stock futures, Nifty futures are witnessing low activity in the derivative segment. This could be proved by the fact that on a daily average basis, Nifty futures see a change in open interest positions between 3.50 crore shares to 4 crore shares which have now come down to 1.5 crore shares to 2.50 crore shares.
Some of the counters that have witnessed huge open interest in stock futures are Bharati Airtel, SBI, ICICI Bank, Nagarjuna Fertilisers, Satyam Computer, and Gitanjali Gems. The put-call ratio is at a comfort level of 1.27, indicating that the sentiment is still positive in the market. Market experts say that the put-call ratio below one points to bearish sentiments among investors where more of put-writing happens.