Market Outlook: We expect the market to remain fairly bullish today. The heavy selling pressure witnessed at 4035-40 levels in NIFTY was seems have being absorbed yesterday at around 3930-40 levels but reiterate that selling will resurface at various stages in the 4000-4100 range. We continue to hold our belief that the journey from 4000 to 4100 would see NIFTY facing and possibly stumbling at different levels of resistance. NIFTY futures have a fresh support level of 3890 and the crucial resistance of 4045-68 zone.

NIFTY futures closed at the 3977 mark yesterday. The discount changed to 20.30 from earlier session’s 12.60 points. Futures volumes were up by 56% as open interest in NIFTY Futures increased by 3.73% at the end of the day. Looking at the statistics it appears that some fresh short positions have been added in NIFTY Futures yesterday.

The option volumes witnessed a sharp increase yesterday wherein turnover in Index options Segment stood at INR 51645 million as against INR 43032 million on Monday. The strike price range in which the majority of action took place remained between 3900-4100. Accumulation in call options was noticed in the range of 3950-4100 strikes. All the liquid strikes in NIFTY put segment at and below 3900 strikes have remained flat in terms of OI change in the near month contracts and action is dominant in the MAY-07 series. Nothing much can be read between the lines about the indications given by options stats. Based on the outstanding positions in the MAY-07 series, there are sufficient indications that lead to a conclusion of strangles being built (albeit in small qty.) in the MAY-07 expiry.

The options of 3900-4000-4100 strikes of MAY-07 continued to witness build up in small quantity in open interest as positions in 3600 and 3800 APR series options witnessed unwinding. In the near month contracts, position build was seen in the 3900-4000 PE. The PCR-OI in NIFTY remained unchanged at 1.13. The Call IV fell from 21.70% to 24.50% whereas the Put IV was up from 27.60% to 28.50%.

FII’s in F&O on 19-Apr-07 :

NET Sold Rs.933.83 crores
Index Futures Sold Rs.942.24 crores
Stock Futures Sold Rs.198.21 crores
Index Options Bot Rs.209.00 crores

State Bank of India, up 2 per cent at Rs 1,055, was the top Nifty gainer after Chairman O P Bhat said the bank will come out with a follow-on public offer this fiscal to raise funds.

ICICI Bank ended up 1.5 per cent at Rs 912 on reports RBI had permitted its stake holder Temasek and Government of Singapore Investment Corp to each hold up to 20 per cent stake in any Indian company.

Reliance Industries was up 0.5 per cent at Rs 1,492 on reports the company has discovered “significant” amount of gas in the offshore block in Saurashtra.

Parsvnath jumps on project launch: Parsvnath Developers was among the top ten gainers and rose by nearly 3.3 per cent as it announced that it had performed the ground breaking ceremony and launched Parsvnath Royale, a premium multi-storied complex in Panchkula. Parsvnath Royale, a 146 crore project is spread over an area of 7.2 acre and is strategically located in the heart of the city. So far, Parsvnath scrip has had quite a torrid time at the bourses and had declined over 30 per cent in the past three months. Though the stock has risen over 9 per cent in the past month, it still trades about 48 per cent below its lifetime high of Rs 579 on November 30, 2006.

Apollo Tyres up on falling rubber prices: Apollo Tyres was the second best performer in the A group rising by about 5.7 per cent as falling rubber prices created positive sentiments for tyre scrips. Tokyo September 2007 rubber futures tumbled by the daily 10-yen limit to Rs 286.9 yen ($2.42) a kg. Recently, the company had announced that a board meeting will be held on May 1, to approve the audited financial results for FY07 and consider and recommend payment of final dividend. The scrip did not have a great time at the bourses in the past one year and had actually fallen by about 10 per cent. It has risen about 11.3 per cent in the past one month.