F&O Cues: Nifty may break 3800 level

The trading pattern in stock futures on Friday suggested that derivatives players were either creating fresh short positions or booking profit, if possible. Of the 260 stock futures, as many as 112 witnessed an unwinding of long positions, while a fresh short build-up was seen in 123 others. The 13 others witnessed a modest long build-up, while remaining 12 did not show any indication.

Among the stock futures, unwinding of long positions was seen in Ashok Leyland, HCL Technologies, Hindalco, Sterlite, State Bank, NTPC, Tata Steel and Wipro. A build-up of fresh shorts was seen in Chambal Fertilisers, ICICI Bank, Ispat Industries, Ranbaxy, Reliance Industries and Reliance Communications. Profit-booking was evident in Sesa Goa and ITC.

Options trading on Friday suggested that the Nifty is more likely to break the 3,800 level than moving above the 4,300 level. Selling in call options contracts between 3,800 and 4,200 strikes with 4,000-4,200 strike calls together added an open interest (OI) of 2.2 million shares. Interestingly, the 3,800 strike put witnessed a sharp increase in OI, mostly through buy contracts, indicating that the 3,800 level is becoming vulnerable.