F&O OUTLOOK: Nifty may re-visit Jan 10 high

The March series expired on a positive note with strong long rollovers in Nifty April futures and key stocks futures such as Infosys Technologies, Larsen & Toubro, HDFC Bank, Bharti Airtel and Reliance Industries. The aggregate rollovers in Nifty April futures were at 21.50 million shares, much less than the rollover of 28 million shares in the February series. This and April futures closing at 13 points premium to the spot indicate that participants have rolled over long positions.

The market is expected to open on a strong note on the first day of the April series on account of strong buying in Nifty futures above 5,255. The futures closed above the upper level of the value area (5,215-5,255) with more than one-third volume, mostly buy-side, changing hands above 5,255. Historical evidence suggests the market remains strong in the next few sessions when a security closes above the upper band of the value area on strong buy-side trades. So, the Nifty will most likely re-visit the January 10 high of 5,310 tomorrow or next week.

The trading pattern in call options suggested that participants built long positions in 5,200 and 5,300 calls of the April series. The open interest in the 5,300 call is up 1.17 million shares through a blend of buy and sell trades, which indicates the index may face strong resistance when it closes above its January high level.

Strong support is seen around 5,200 based on build-up of open interest in the 5,200 strike put of the April series. Interestingly, the 5,300 put added 341,650 shares in open interest through sell-side trades on expectation of a bull rally ahead.

Among stock futures, Infosys Technologies, Larsen & Toubro and HDFC Bank closed above the value area on account of strong buy-side trades in the April series. The time-price opportunity price projections indicate the Nifty may move around Rs 2,830, HDFC Bank around Rs 1,935 and Larsen & Toubro around Rs 1,638. Reliance Industries moved in a small range with lower volume indicating that the participants are tired of supporting the stock at the current level.