The weighted average annualised ready future spreads stood at 11.6 percent, up by 478 basis points, from last weekend, showing that investors were not willing to take leverage position in the derivatives market. Average daily futures volume was recorded at 39.7 million shares, with average value of Rs 4.7 billion, from 46.2 million shares and Rs 5.1 billion recorded in the previous week. However, very thin activity was seen in the May futures because of new regulations, which discouraged over-investment in the futures. As this was the last week for April futures contracts, stumpy volumes in the May contracts reflected that investors did not roll over their April futures position to May contracts.
Investors with open position in the April contracts had three options: to rollover their position (to sell April contracts and buy May contracts), use badla financing, or sell their April futures position. Low volume in May contracts and increased badla investment, especially on Friday (by Rs 1 billion), reflected some shift from futures to badla financing.
Open interest (net investment/purchases made in the futures market) was recorded at Rs 6.1 billion, down by Rs 0.6 billion from last Friday. Open interest recorded on the last day of April was 80 percent less, compared to open interest recorded on the last date of March trading contract. This substantial decrease reflected lower investor interest in the futures market.
Next week, open interest will further reduce as April contracts would be excluded from the calculation and only May contracts will be there. This is a sign of reducing leverage position as it has been observed that speculators are leaving the market and genuine buyers are entering.
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