Spot & Future price movement

Spot & Future price of the same stock or index varies till it converges on the expiry day. I have a question, is Future price dependent on Spot movement (or) Future price provides an indication of upcoming move.

Most of the times, future price is higher than spot price. In some cases, Future price is less than spot price, it is at a discount.

There are two examples this week (1) Repco home (2) Ajantha pharma

In the case of Repco home, spot price rallied on 6th Mar 2019, where in Future price didn’t move as much. At the end of the day, spot price came back closer to the Future price. The following day, 7th Mar 2019, Repco spot & future price movement was similar.

In the case of Ajantha pharma, on 6th Mar Future price was oscillating above and below Spot price. On 7th March, Future went down more aggressively than the spot and dragging it down along the way. However, Future price % down was more than the spot.

What can we infer from spot & future price movements? and how we can take positions?

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There can be 400 things. Right now it is heavy infusion of FII money lifted the cash market.

This is creating arbitrage.

It varies situation to situation.

See the after math - It went up and down both giving good swings. Here, futures and equtiies are behaving like two entities.

Mostly, the equity falls as a gap down adjusting with the futures price.