Buying support at lower levels

F&O OUTLOOK

The markets on Wednesday ended their four-days losing streak, with the Sensex and Nifty rising by 1.2 per cent each on the back of short-covering in large caps.

The Sensex futures closed at premium of 47 points, while the Nifty futures finished at a modest discount of 15 points, indicating the emergence of buying support at lower levels.

The markets lacked depth, with advance decline ratio (ADR) at 1:3. Large cap stocks, however, did well. The ADR was 3:2 for Nifty stocks and 1:2 for Sensex stocks. The derivatives turnover hit another low of Rs 33,581 crore in the absence of day traders, particularly retail participants.

Yesterday, bears had squared off their intra-day short positions. Bulls went long at lower levels on Wednesday, compelling the bears to scurry for cover.

The open interest in Nifty March futures declined further by 10.96 lakh shares despite trading volumes of 28 million shares. Short covering took place in front-line software and bank stocks and long positions were created on the Reliance Industries, Tata Steel and Steel Authority of India counters.

Software stocks were back in action, with Infosys Technologies, TCS and Wipro gaining 2-5 per cent each and Satyam Computer surging by 7.2 per cent.

Infosys Technologies and Satyam Computers saw short covering amounting to 3.50 per cent of the total OI, while the short covering in Wipro and TCS was around two per cent of the total open interest build-up.

With the Nifty closing above 4,900 on Wednesday, technical analysts expect a bounce-back to 4950"�4980 levels.