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| Short-covering brings down Nifty OI | |
| F&O OUTLOOK | | B G Shirsat / Mumbai December 3, 2008, 0:16 IST | |
The domestic markets, moving in tandem with global cues, opened in the red On Tuesday. However, both indices recovered sharply in the last 90 minutes of trading on short-covering day traders in index and key stock futures, triggered by a strong opening of the European markets and the 174-point gain in the Dow Jones futures.
The S&P CNX Nifty, spot and futures, recovered by almost 90 points on short-covering in key index heavyweights. The Nifty futures witnessed a trading volume of 19.57 million shares (37.7 per cent of trading) in the last 90 minutes of trade. Bloomberg data suggest that most of these trades were from the buy side.
No wonder, the open interest (OI) of Nifty futures declined by 8.09 lakh shares, though it had increased by 2.63 million shares during the intraday trade. This shows that some traders have covered their short positions. The index options also witnessed short-covering in 2,800-3,000 strike calls as some traders expect a recovery in the world markets and a gap-up opening for the Indian markets tomorrow.
The 3,200 strike call, which acts as strong resistance for the Nifty’s upward journey, has shed an OI of 2.17 lakh shares, mostly on account of profit-booking from call buyers. However, buying was seen at the 2,600 strike call (OI up 570,150 shares) and the 2,700 strike call (OI up 495,950 shares), indicating that the index has strong support below the 2700-level.
The 2,500 strike put added an OI of 6.8 lakh shares, taking the total OI to 38.3 lakh shares. F&O participants today added an OI of 6.21 lakh shares in the 2,600 strike put and shed an OI of 2.53 lakh shares in the 2,700 strike put. This suggests that the Nifty is expected to trade between 2,500 and 2,700 with an upside resistance at the 2,800-level.
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