F&O Outlook: Creation of fresh long positions

While the expiry of current month contracts is still seven days away, bulls have already added open interest of one million shares in Nifty August futures. The derivative players expect the Sensex to touch 14,400 and Nifty to test 4,300.

The 4300-4500 call options were in the limelight, registering an aggregate turnover of Rs 6,000 crore. The 4300 and 4400 call options witnessed short-covering and fresh buying as players may have hedged their short positions in Nifty futures. However, there was call writing at the 4500 strike price, indicating resistance above those levels.

The Nifty July futures added open interest of 3.18 million shares during the intra-day trading, but witnessed a decline in OI by 0.8 million shares in close-out trading. The July futures premium reduced to nine points, while the August futures closed at a discount.

The trading data sourced from Bloomberg reveals that players booked profits above the 4250 level, as the sellers offered more contracts than buyers.

In the last four consecutive days, the Nifty recovered more than 12 per cent from the low of 3790. Technical analyst Ashish Shroff of Ambit Capital sees a possibility of profit booking above the 4300 level as the intra-day technical indicators are overbought.