Open interest (OI) and stock price

The End of Day(EOD) Open interest is a signal.

In a bullish market, OI tends to be high, bcoz there has been an large no.of interest in the F&O segment than cash

Close to Settlement/Expiry, High OI suggests that there will be high carry-over to next month and which shows bullish market.

If open interest is rising and stock price is also rising, bulls are adding positions
If open interest is falling and stock price is also falling, bulls are booking profits.

If open interest is rising and stock price is falling, bears are shorting.
If open interest is falling and stock price is rising, short covering is taking place.

Spot volumes:A rising price shud always be backed by high volumes,it means there is no end to demand as price rises.

At near market peak,spot volumes usually decline and start thinning out-this signals the demand is declining.

Breadth: A market where breadth is strong is a healthy bull mkt.


Near mkt peak, trading interest tends to decline, and declining shares start to outnumber advancing ones.

Depth:As price flucuate,so do trading volumes. In a mkt with a good depth,a price fluctuation will not lead to a instant loss of volume.

For eg.A Rs.100 share sees a volumes of 200,000.
If prices rises to Rs110,or drops to Rs.90,and it volumes remain constant,we say that it is deep market.

Near a mkt peak, small price changes leads to large volume changes.