F&O Outlook: Nifty to settle around 4200-4300

The Sensex and the Nifty opened weak during the morning session on the back of a hike in the cash reserve ratio (CRR) and repo rate but recouped losses in the afternoon to close with modest gains on short covering in key index-based stocks.

The Nifty July futures contracts witnessed 63.1 per cent rollovers compared with 45 per cent yesterday, while discount for June futures widened to 40.6 points, indicating an absence of long rollovers.

The Nifty June futures contracts, which will expire tomorrow, added an open interest of 3.34 million shares during intra-day trades. Due to rollovers, open interest has come down by 10.61 million to 17 million shares during the close-out.

The Nifty July futures contracts added 9.68 million shares. Fresh long build up was seen in the July series call options at 4200, 4300 and 4,400 strike prices.

Open interest for the 4200 and 4300 July call option jumped 488 per cent and 155 per cent, respectively, largely on account of long positions. This indicates that the Nifty is likely to trade above 4200 tomorrow and may move up further to 4300 and 4400.

Interestingly, the Nifty June options PCR open interest at 4200 strike price is at 3.1 and 1.2 at 4300. This indicates that the Nifty June futures contract may settle between the 4200 and 4300 levels.