FnO Datasheet - 05-08-11

For a massive down move of 120 points ( it went down by 200 at one point), the eye catchers are PCR increase and the massive volumes.

My first reaction at 7.30 on Friday night was FII did not cover any shorts. However, at that time DOW was moving up nicely at 2%. Looked contradictory at first place - but still that is the way things move in the market. As Hugh Akston says in Atlas Shrugged, contradictions do not exist. If they appear, check their premises - one of them will be wrong.

Here are my observations:

1. FII dealt with high volumes. However, at the end of the day, OI increased by 18K contracts versus net buy of 3K contracts in the day. It suggests that FII did a lot of day trading. :)

2. Futures net OI decreased by 3.5L contracts. So, safe players booked profits. As institutions did not book profits - is it the retails who booked out?

3. Desi MO reached bounce zone at -91. However, this is not a trading zone, but I believe is a trending environment - so not safe to jump into longs based on only this indicator. We probably need a bit of more confirmation that capitulation happened.

4. Though we did form a panic bottom at 5114 - and at the trading room all of us went long courtesy Vinod, we were aware that institutions did not cover shorts as repeatedly pointed by Shai in the trading room.

5. The massive selling in equities by FII is expected and has been indicated by me in the earlier posts - where I said, first short positions are created in FnO segment and then equity selling will happen.

6. Let me put an interesting observation, we closed the day more or less where we opened. In between, 100 point swing happened both ways. So, traders should have made money - and longer term players' position remained the same. Exactly the same is indicated by FII stats. They did a lot of day trading - without changing any thing in the longer term perspective. Whoever, did the counter trading to that would have lost heavily.

7. US has been downgraded by S&P, after US trading hours. How world markets will react to the news is anybody's guess. If there is a massive reaction, probably I consider this as a buy time.

8. When everything looks safe and bullish to you, it is selling time. When there are media stories that world is going to collapse, time to buy. Is trend really the friend? :)

9. We intend to move to the green side of the spectrum with the help of our bottom catching specialist Vinod in the next two days.

Those of you who want to look at the pure numbers, with out my colored glasses can find the datasheet here.