F&O Outlook: Consolidation around 4,500

The Nifty June futures witnessed an intra-day build-up in short positions, to the extent of 3.17 million shares, leading to a widening of the discount to 37 points. However, the close-out session not only saw short-covering but also unwinding of previous day's short positions. The open interest in Nifty futures thus declined by 1.4 million shares from an intra-day increase of 3.17 million shares, while the discount reduced to 17 points from intra-day high of 37 points.

The spot Nifty recovered from the day's low of 4489 to close at 4505 and Nifty June futures bounced back from 4465 to close at 4487, due to short covering.

Continuing with yesterday's bearish momentum, the markets opened with a negative gap and continued to decline till close. The Sensex closed at 15,088 (down 334 points) and the Nifty ended at 4,504 (down 78 points).

The BSE Realty Index and Bankex were the worst hit indices for the second consecutive session, tumbling around a per cent each. The shares of Unitech fell six per cent to Rs 189, while ICICI Bank shed four per cent to Rs 753.

According to an Edelweiss analyst, rate fears took a toll on the CNX Bank Nifty on Thursday. There was an aggressive build-up in short positions, as the banking index declined by 4 per cent, accompanied by a 10 per cent surge in open interest.