Recovery may continue in short term

F&O OUTLOOK

The June series expired on a positive note with benchmark indices gaining around 1.4 per cent, powered by fresh long positions in Reliance Industries and State Bank of India. All the four technology stocks were in demand, while the fertiliser stocks soared on announcement of the new policy.

Reliance, which has the heaviest weightage in the main index, rose 4.9 per cent to Rs 2,239.25, its highest close in a week after the government said the company was expected to start pumping gas from its D-6 fields by September.

This has resulted in a major rise in open interest in the July futures (added 2.34 million shares) with total rollovers surging to 73 per cent.

The market-wide rollovers advanced to 71.4 per cent from 62 per cent while the Nifty rollovers zoomed to 73.1 per cent from 63 per cent yesterday.

However, the discount to the June futures contracts widened to 50 points from 40 points, indicating that a large part of the rollover was in the form of short positions. This may lead to a near-term uncertainty in the market.

Activities in the call options suggest that the Nifty is likely to advance to the 4500-4600 levels going forward. Operators were seen buying call options at 4400, 4500 and 4600 strike prices as open interest of 2.8 million shares got added around these strike prices. Put writing was seen near the 4200 and 4300 levels, indicating a rising support for the Nifty.