Post-Budget Rally Seen In Bank, Cement, Psu Scrips

With just five days left till the Budget for 2003-04 is announced, punters have started building positions in the derivatives market. The open interest in banking, cement and public sector stocks has risen significantly.

Most of these stocks are quoting at big premiums to the underlying spot prices on expectations of a post-Budget rally.

Open interest is the number of contracts outstanding at any time. The open interest in both the ICICI Bank and State Bank of India scrips surged 19.2 per cent week-on-week. The biggest surge in open interest has been in Bharat Heavy Electricals at 46 per cent (week-on-week) to Rs 11.71 crore on February 21. The open interest in Gujarat Ambuja is up 45.3 per cent to Rs 11.69 crore.

The total open interest in the market has surged 9.7 per cent from Rs 185.74 crore on February 14 to Rs 203.82 crore on February 21. The open position in value terms was the highest in Tata Steel at 10.6 per cent of the market-wide open interest of Rs 2,166 crore.

This was followed by the State Bank of India at 9.4 per cent and Hindustan Petroleum at 10.1 per cent). According to IDBI Capital Markets, the current level of open interest exceeds that at any time in the past six months.

Interestingly, the future prices of stocks are at a significant premium to the spot prices. Tata Steel closed at the highest premium of 16.2 per cent to the spot price in March contracts. March futures of the State Bank of India, ACC, Larsen & Toubro, Hindustan Petroleum and Reliance Industries also closed at significant premiums.

Players are also increasing their positions in Nifty futures. Last week, Nifty futures were the most traded in the segment and contributed to 16.1 per cent of the market volume (58,281 contracts). The open interest in Nifty futures increased 7.7 per cent week-on-week (10,888 contracts at the end of last week to 11,728 contracts).