Markets may open strong

F&O OUTLOOK

The bullish candlestick, however, got terminated near its 200-day moving average (DMA) at 5,130 (Nifty May futures touched an intra-day high of 5,133), which if positively breached will see the index aiming at 5,200.

The bullish trend shows a further upside and can come as a gap-up or high-volume advance. As candlestick patterns are short term in nature and usually effective for only one or two weeks, the bullish confirmation should come within one to three days after the pattern.

A gap-up is formed when a security opens above the previous period's high, remains above the previous high for the entire period and closes above it.

A positive or a gap-up opening on Monday is on the cards, indicated by a strong buying by foreign institutional investors (FIIs) in index futures, stocks futures and index options on Friday.

FIIs were net buyers of 13,185 index futures contracts, 9,059 index option contracts and 1,900 stock futures contracts on Friday.

The FII buying in index futures contracts was almost 57 per cent of the total 23,538 index futures contracts carried forward as open interest (OI) on Friday.

FIIs seem to have hedged their positions by buying 4,900 strike puts as the 4,900 strike put had more buyers than sellers on Friday. FIIs were also net buyers of Rs 313 crore worth of shares in the cash segment, indicating that they are currently bullish on Indian markets.

Trading in Nifty options on Friday suggests new support for the Nifty emerging at 5,100 from the 5,000 level. This is indicated from more buy orders than sell orders, showing long buying, while options open interest at 5,100 strike had increased by a modest one lakh shares on the total trading volumes of 10 lakh shares, indicating intra-day short-covering.