Short covering in select sectors

F&O OUTLOOK

Capital goods, telecom and power stocks witnessed short covering in the derivatives segment as the 8.6 per cent growth in industrial production numbers for the month of February surpassed market expectations.

The Nifty April futures saw long buying around 4740, taking the Nifty to the day's high of 4825. Interestingly, the intra-day long positions not only led to a 13 per cent increase in the Nifty futures open interest, but also shifted the balance from a discount of 10 points to a premium of around six points.

However, once the Nifty futures breached the resistance level of 4800, the bulls booked profits and bears initiated fresh short positions. As a result, the Nifty futures closed at a discount of 5 points and the open interest declined by around seven per cent.

The 4700 puts witnessed a 84 per cent increase in open interest, while the 4800 and 4900 Call options saw an OI build-up of around 19 per cent each. Therefore, the Nifty has a strong support at 4,700 and resistance around the 4800-4900 levels.

In the capital goods segment, the stock futures of Larsen & Toubro, BHEL and Siemens India gained over 3.5 per cent and the OI declined by almost one to two per cent each on account of short-covering.

Bharti Airtel and Reliance Communication gained around two per cent each, accompanied with a decline in the open interest, indicating short covering.

Tata Power witnessed the creation of fresh long positions, with the stock futures rising by around four per cent.