Infrastructure, real estate, power and PSU stocks can be in the thick of action as various positive growth measures expected to be introduced in the forthcoming budget.

After a huge volatile week the S&P CNX Nifty ended 47.25 points higher at 4422.75 during the week ended 3rd July 2009. The rollover to the July series during the previous month was disappointing, as the market seemed to be directionless ahead of the budget. Also during the previous week in the futures & option (F&O) segment huge unwinding of open interest (OI) was witnessed in many of the stock futures besides Nifty near month contract. Thus it seems like the market participants are shedding their existing position ahead of the budget thus waiting for fresh cues from the budget to take any fresh position. A lot of expectation is built-up on the budget as some considering it as one of the biggest budget for the congress government. The market expects the budget to focus mainly on infrastructure, social issues and divestment of public sector units. Besides the favorable FDI roadmap as laid out in the economic survey could provide a positive direction ahead.

The present UPA government at the Centre has to give clear roadmap for the next 5 years. The current budget is expected to emphasize on the ‘Aam Admi' theme focusing on the welfare of general public by ways of different tax soaps and measures to control the rising consumer price inflation (CPI), which still is rising in excess of 10% although the WPI is in the negative territory. The budget would focus more on infrastructure development and socialist issues like rural development, education reforms, employment generation and healthcare.

The F&O market volume remained insignificant as compared to the previous months. The average volume for the current series till date was Rs 51,897.70 crore whereas the average volume for the week was Rs 52,662.92 crore. Most of the front-line future stock saw winding-up of OI on Friday. For e.g. Reliance future shed 1.34 lakh shares and the total OI stood at 60.70 lakh shares. Tata Steel shed 2.7 lakh shares in OI whereas Tata Motor shed 3.82 lakh shares in OI. Nifty July shed 2.59 lakh shares in OI and the total OI of Nifty near month stood at 2.2 crore shares.

Also the Nifty future traded at a discount to the underlying throughout the week although it closed at a marginal premium of 1.9 points to the underlying on Friday. On Friday the Nifty spot rose 73.90 points to close at 4422.75 due to significant short covering in most of the stock futures as well as Nifty.

The Index and stock future may have gone without much participation during the week; however the index option market remained extremely active with interesting patterns. Extreme out-of-the-money strike put were aggressively written whereas out-of-the-money calls were aggressively bought thus indicating a strong up-ward bias. The 4600, 4700 and 4,800 witnessed active addition of OI whereas 3,800, 3900, 4000 and 4,100 strike puts also witnessed addition of OI due to aggressive put writing at these levels.

The index put call ratio increased to 0.88 on 3rd July 2009 as compared to 0.76 during the previous trading session, whereas the stock put call ratio increased to 0.25. Thus the market wide put call ratio was 0.83 as compared to 0.72 on 2nd July 2009.


On the stock futures, scrip's in the infrastructure, real estate, power and PSU stocks are expected to be in the thick of action as various positive growth measures are expected to be introduced for these sectors in the forthcoming budget. State-run oil marketing companies HPCL and BPCL may see some action as a roadmap for decontrolling fuel prices in the country is expected to be presented in the budget. Now since the market is going light into the budget fresh bullish position would be seen building-up on the budget day.

Tags: the week that was