May Futures Set To Mature Without Significant Gains

The derivatives market is likely to stay range-bound tomorrow with the expectation that the May index futures contract will not mature with any significant gains.

It is expected that the May contracts will expire tomorrow (last Thursday of every month) at almost parallel levels to the indices in the cash markets. The May Nifty futures may mature between 1025-1050 points, while the May Sensex futures are expected to mature in a 3140-3180 points range.

The S&P CNX Nifty closed 3.45 points higher at 1041.65 points today, while May Nifty futures ended 6.35 per cent higher at 1045 points.

Since, after many days, all the three futures (May, June and July) ended at a premium to the underlying spot indices today, it suggests that there might not be a carnage as was expected earlier, market players said.

Moreover, there was a spurt in volumes in all the three contracts. Though open interest in the near-month futures declined, volumes in the June contract rose with positions shifting to the June futures.

The volumes in Nifty May futures moved up to 4289 contracts, while the open interest was at half of the volume at 2031 contracts, suggesting that most players had squared up their positions, not expecting any gain tomorrow.

However, as against this, the open interest in Nifty June stood at 2602 contracts, almost equal to the traded volume of 2674 contracts.

The near-month May Sensex futures also ended higher, while the June contract fell. The near-month futures ended at a premium to the underlying Sensex. Volumes in the May contract rose while those in the June futures declined.

While the Sensex in the cash markets closed 13.41 points higher at 3160.24 points, May Sensex futures closed sharply higher by 44.30 points at 3169.40 points. However, the situation on the BSE is also similar to that at the NSE with the open interest declining to 850 contracts as against the traded volume of 2450 contracts in Sensex may futures.

In June series, the open interst is 300 contracts as against volume of just 50 contracts for the Sensex series.