Markets may open weak

F&O OUTLOOK

Global market cues, profit booking at higher levels and the expiry of the July futures series are likely to impact the trading sentiment on Monday.

The market is likely to open weak with the BSE Sensex moving down by around 100 points, while the S&P Nifty may see a correction of about 30 points. Strong support for the Nifty exists at around the 4,500 level, while strong resistance is seen around the 4,600 level. The put-call ratio of the Nifty open interest (OI) increased considerably from the previous week's level of 1.62 to 1.73 at the close of the week. The relative strength index (RSI) at 87 and the higher put-call ratio indicate overbought positions.

Zeal Mehta, derivative analyst, Emkay Shares, has maintained his positive view on the markets for the coming days. Though the Nifty corrected after it registered a high of 4,600 on Friday, the implied volatility (IV) of the Nifty remained at low levels of 16-18 per cent. According to him, any further correction shall only serve as an opportunity to buy. The PCR (OI) of the Nifty has moved higher to 1.73, and one shall have to keep a close watch on the PCR from the current levels. The high PCR, however, does not mean that the markets have approached the overbought zone, he feels. Support for the immediate term is seen close to the 4,500 level, and strong support is seen in the range of 4,350-4,300.

The major buyers in the markets, the foreign institutional investors (FIIs) and domestic mutual funds (MF), had contrarian views last week. While the FIIs, as per the buy and sell data released by the BSE and the NSE, were net buyers to the tune of Rs 2,672 crore, the MFs were net sellers worth Rs 1,124 crore.