Indicators are bullish

F&O OUTLOOK

As long as the markets hold above 3850 futures and 3875 spot next week, the trend will continue. Any declines can be bought into as long as these levels hold. Nifty has closed above the 3,900 levels on higher trading and delivery volumes.

The daily RSI chart is supporting the recovery. Analysts at Motilal Oswal expect Nifty to target 3,935 and 3,965. On the downside, 3,900 would act as good psychological support.

Nifty closed well above 3900 levels accompanied with a remarkable improvement in the market wide cost of carry and a decline in the Nifty discount to 15-20 points towards the end of session. The implied volatility of Nifty also dropped to 23-24 per cent from 26-28 per cent levels throughout the week.

The Nifty 4000 Call options hold over 34.5 lakh shares in OI representing 22.4 per cent of total Call OI and therefore expected to act as resistance level going ahead. According to an analyst at HDFC Securities, the 14-day RSI of the Nifty is yet to pierce the 60 levels.

The indices, which are in a strong bull grip, have a tendency to gain momentum once they cross the zone of 60. So, the main indices could continue to consolidate between the 12825-13400/3750-3900 ranges until momentum picks up.

With the Infosys results out of the way and inflation softening, the market is poised for more gains. After Infosys, it's now going to be the turn of other IT giants like TCS and Wipro to deliver the goods next week.