Nifty seen moving to 4000 soon

F&O OUTLOOK

The Nifty is seen heading towards 4000 as the RBI announced a 50 bps hike in repo rate and CRR on Tuesday after the trading hours. Bear operators were seen creating short positions in the Nifty June futures with only two days left for the expiry of the June futures.

The June futures closed at a discount of 32 points and this, according to analysts, is a weak sign and the Nifty can go down further to the 4000 levels in the near future.

The Nifty rollovers to the July futures accounted for 44.9 per cent of the total open interest in the Nifty futures. The underlying discount to the spot Nifty also widened from 16 points to 51 points despite a continuous oversold position on a daily chart.

This indicates that bears have tightened their grip on the markets, thus making a technical bounceback difficult. The Nifty PCR open interest declined to 1.19 from 1.37. This indicates that bears have been writing more call options while bulls are covering their long positions.

The support at the 4200 level weakened on Tuesday as operators covered open interest at 4200 put with open interest at that level declining by 6,98,000 shares. Call writers increased their position at 4200 with open interest at that level increasing by 8,15,000 shares.

The Nifty is likely to move below the 4100 levels in the near future as operators were seen buying the July put options at 4100 strike price while the put writers were covering their June contracts short at 4100 strike price.

Call buyers were seen buying the July contract at 4200 and 4300 strike price indicating that the Nifty may not move above the 4300 levels in near future.