Higher levels see short selling

F&O OUTLOOK

The indecisiveness between bulls and bears resurfaced on Thursday. There was massive short selling, with the Nifty futures declining by 42 points and closing almost at par with spot Nifty.

The Nifty futures tested 6155 on the downside after a subdued opening and finally closed the day with a loss of 42 points.

Technically, Nifty futures have a strong resistance around 6200, which is a strong supply zone. Fresh momentum would emerge only after this level is decisively surpassed and the next target would be 6350.

Though the trading volumes in Nifty futures declined by 1,73,574 contracts on Thursday, the open interest increased by 27,597 contracts. This shows that shorts have been carried forward.

The five days and monthly relative strength index (RSI) is above 80, which indicates over bought conditions. The maximum addition of Option contracts took place in the 6000 Put options, which increased by 4,194 to 39,686 contracts.

The Nifty 6,100 Put options added open interest of 1,160 contracts. The support at 6,100 is thus intact. Moreover, fresh support has been seen at the 6,000 levels.

The Nifty PCR rose to 1.37 from 1.34 as Nifty Put options added 7.30 lakh shares and Call options added 3.50 lakh shares in open interest. Call option buying was seen at 6,200 and 6,400 strike prices, while short covering happened at the strike price of 6,100.

Among the Nifty shares, short selling was seen in Bharti Airtel, Dr Reddy's Laboratories, Grasim and ICICI Bank. Reliance Energy appreciated by 6.1 per cent and Tata Power rose 4.27 per cent.