Monday, February 16, 2009

>Equity Weekly Watch (ANAGRAM)


The battle of the titans is on the cards. On Monday we will have the vote-on-account and the market's reaction to this interim exercise will determine whether the bulls or the bears will have the final say.

At this point of time the bulls have the balls. If you were to take stock of the open interest (OI) added in stock futures after the January expiry, you will find that it has reached 30.7%. In order to compare like against like we looked at OI addition up to expiry plus 11 sessions and found that this addition is the highest percentage terms since September 2006, when it was 32.6%.

This piece of data tells us that the markets have never added OI with so much of gusto in the past 29 months. If the markets continue to be bullish even after the VOA, then there is no looking back and we will a rocking rally. But should for any reason, the rally engine sputters and it starts going down then the positions built will ensure that we fall with equal aplomb.

Now this rally in our domestic market comes about amidst a week of discontent in global markets. Our Sensex has risen 3.7% in contrast to a 5.20% slide in the Dow. This kind of an outerperformance is rather abnormal. Another theory going in the street is that the powers that we have muzzled up the most vociferous bear on the street on Friday evening and have winked at the bulls to take the ball and run till the elections.

To see full report: Equity WW