Positive view continues

F&O OUTLOOK

Infosys' poor guidance for 2007-08 disappointed the markets, with the BSE Sensex shedding 100 points and S&P CNX Nifty going down by 19 points.

However, the correction in the last three days has not prevented the technical analysts from taking a positive view on the markets. As in the last two trading sessions, the operators covered their short positions on Wednesday as well, with the Nifty futures discount narrowing down to a mere two points from 12-14 points earlier.

The mild correction after the Infosys guidance is likely to be short-lived as the benchmark indices rebounded from the day's low. Though the intra-day clues were directionless, trend reversal is indicated only if the Nifty breaks the 4,300 level.

The Nifty July futures bounced back on Wednesday from the support level of 4360. The intra day clues point to in-the- money call buying and out-of-the money put writing. This, according to an analyst Kamalesh Langote, means that complacency is setting in the markets.

It was surprising to see the players writing far month calls and puts at the strike price of 4,400. The NSE F&O data shows that open interest in September 4,400 call moved up by 2.55 lakh shares and that in 4,400 put went up by 2.68 lakh shares. According to Zeal Mehta, derivative analyst at Emkay Share, the players are taking long term view on either side.

The Nifty witnessed profit-booking, but found support near 4360. Yesterday's low of 4345 would be crucial for the remaining week. On an intra-day basis, the index may find support around 4360. A break of 4345 and 4320, could see a bigger slide.

The open interest in Nifty put and call options suggests strong support at 4,350, 4,300 and 4,200. Strong resistance is seen at 4,400, 4350 and 4,300 levels.

The Nifty PCR (put call ratio) advanced further to 1.57 from yesterday's level of 1.56 , with the addition of 6.98 lakh put options and 3.28 lakh call options in open interest. The implied volatility remained unchanged at 19.21.