Nifty may settle below 2,750

F&O OUTLOOK

The benchmark indices, Nifty and Sensex, closed on a dull note as key index stocks ended at the day’s low even after a strong opening, indicating profit-booking at higher levels.

Nifty futures witnessed poor volumes as traders went for short-covering during the morning trade and unwinding of long positions at higher levels.

The Nifty February futures shed an open interest (OI) of 3.23 million shares, while the March futures added an OI of 2.76 million shares, indicating that bulls have unwound their short positions. The February futures of Reliance Industries (RIL) shed an OI of 9.62 million shares, while the March series added an OI of 9.57 million shares, indicating that traders have rolled some long positions.

The March futures of State Bank of India (SBI), DLF, Bharti Airtel and Larsen & Toubro (L&T) closed at a discount and added an OI that was more than what they shed in the February series, indicating rollover of short positions. Bhel and ICICI Bank witnessed unwinding of long position in the February series and short build-up in the March series.

The Nifty March Futures were trading in a range of 25-30 points discount for the major part of the session but closed at a discount of 24 points to the spot. With a day to go for the expiry of the February series, the Nifty and the market-wide rollovers stood at 62 per cent and 57 compared to 54 per cent and 42 per cent respectively on Tuesday.

If one analyses the day’s development, it is expected that the Nifty will settle around 2,700-2,750 tomorrow, the last day of expiry of the February series. These indications are based on the fact that the 2,700 put of the February series has remained listless, indicating support, while the 2,800 call, which held an OI of 5.10 million shares, has witnessed unwinding of long positions, indicating resistance.

The 2,800 and 2,900 strike calls of the March series added an OI of 1.24 million shares in today’s trade, taking the total OI to 6.13 million shares. One can expect the Nifty to trade between 2,800 and 2,900 in the March series before correcting downward.