F&O Outlook: Players go short in futures

The Nifty May futures recovered from a low of 5132 and ended the day at 5174, with the open interest rising by 27.61 lakh shares, indicating long built-up. After the close-out, the Nifty futures settled at 5163 and the OI rise narrowed to 6.70 lakh shares, signalling short covering.

Technical analyst Ashish Shroff of Ambit Capital expects the correction to continue and drag the Nifty to a low of 4940 in the near term. The Nifty completed the recent bounce from 4468 to 5290 and is now likely to retrace 61 per cent from the recent high to trade around 4940.

Almost one third of the stock futures witnessed a built-up in shorts, as the prices declined accompanied with an increase in open interest. Profit booking took place in about 30 per cent stock futures and 10 per cent stocks. Of the 227 stocks futures, only 35 saw long built-up.

The key stocks futures that have seen a built-up in shorts include Bharti Airtel, DLF, HDIL, Reliance Energy, Reliance Capital, Tata Power and Unitech. The prices of these stocks futures declined between 4.5 and 6.6 per cent and the open interest increased by 10-30 per cent each.

The trading in Call options remained listless, with no fresh long built-up seen in out-of-the-money (OTM) calls at the 5300-5400 strike prices. This suggests that the Nifty has no upside in the near future.