Buying emerges at lower levels

F&O OUTLOOK

The strong recovery by the benchmark indices from their immediate support levels of 15,300 (Sensex) and 4,600 (Nifty) indicate the emergence of buying at lower levels.

According to technical analysts, the near-term bottom is not far away. The benchmarks recouped four per cent from the intra-day lows on short covering and fresh long positions in key index stocks.

The Nifty March futures were up by a per cent on closing basis and over four per cent from intra lows. The open interest decreased by 0.61 per cent and the discount narrowed from 45 points on Friday to 16 points.

Out of the Nifty stocks, seven recovered by 10-20 per cent and 20 rose by 5-10 per cent from their intra-day lows. Dr Reddy's Laboratories declined 16.3 per cent intra-day and then recouped 20.82 per cent from the day's low. Bajaj Auto recovered 16.1 per cent, while RPL and NTPC gained over 15 per cent from the day's lows.

The March futures of Dr Reddy rose 0.87 per cent, while open interest declined 1.61 per cent, indicating short covering. RPL futures went up 8.32 per cent and open interest rose 4.1 per cent, which shows buying. The March futures of Reliance Industries gained 1.59 per cent to close at 2,281 as the stock received strong support at the day's low of Rs 2,125.

The Nifty PCR declined from 1.05 to 1.01 mainly on account of unwinding of puts and addition of call options. Strong built-up in open interest was observed in the 4,700, 4800 and 5,000 Puts, indicating near-term support around these levels.