F&O Outlook: Nifty likely to hit 3,150

The Nifty started the new financial year on a positive note, led by index heavyweight Reliance Industries (RIL), ICICIC Bank, HDFC and Infosys Technologies. The Nifty also closed above the crucial resistance level of 3,055 and, hence, it is expected that the benchmark index would try to pierce the 3,150-level.

The Nifty had retraced thrice from this level in the current calendar year and, hence, if the index closes above 3,150, it will definitely target 3,250.

The call option traders believed that the Nifty has built up a strong support at 3,000 levels and, hence, they were seen unwinding in-the-money short positions. The 2,700-3,000 strike call options witnessed unwinding of 714,550 shares from the open interest (OI) on a trading volume of 395 million shares worth Rs 3,977 crore. This indicates that traders, who had built up short positions earlier, have not only covered their shorts, but have also built up fresh long positions.

Buying was seen at 3,100, 3,200, 3,300 and 3,400 calls, indicating that the market is now in an explosive mode. The Nifty April futures, which closed at a discount to the spot on Monday, closed with a 1.50-point premium and added fresh long positions of 379,300 shares. Short positions of 3 million shares were unwound intraday.