Technicals indicate a weak opening

F&O OUTLOOK

Technically, the Nifty has to sustain above the 4100 levels for a relief rally. However, a close of 4075 for the Nifty July futures compared with the spot Nifty closing at 4137 indicate that it is difficult to maintain the 4100 levels in the coming days.The Nifty July futures contracts added an open interest of 3.36 million shares in intra-day trades.

But the Nifty weakened considerably during the half hour close-out session and settled at 4075 as players rushed to square off their intra-day positions.As a result, only 0.37 million shares were carried forward.

Weakness in the markets is also seen from the top traded stocks in the derivatives segment with Reliance Industries, Tata Steel, Larsen & Toubro, ICICI Bank and Reliance Communications recording short positions.

The Reliance stock futures declined 2.52 per cent adding an open interest of 677,475 shares, ICICI Bank declined 7.6 per cent adding a fresh open interest of one million shares and Tata Steel fell 5 per cent adding two million shares. However, long positions were seen in Cairn India. The stock was up 2.46 per cent adding an open interest of 1.3 million shares.

According to a technical analyst at Ambit Capital, all the technical studies suggest that the market has overshot on the downside and the index is extremely oversold, but the external factors have just overshadowed all these.

This was the sixth consecutive week when the index closed in the red compared with its previous week close. Historically, after such a sharp fall, indices usually bounce back sharply.