F&O WATCH: Nifty 3500 in focus

Profit-booking at higher levels saw the markets shed gains, but the Nifty April futures closed at 3546.65, a gain of 22.60 points over the previous close of 3524.05.

Profit-booking saw open interest in the Nifty April futures decline by 3.68 lakh share to 25.41 million shares. The put-call ratio (PCR) of Nifty moved up to 1.56 as against 1.49 on Tuesday as call options added nearly 4.3 lakh shares and put options added over 12 lakh shares (+10.5%).

Significant volumes and increase in OI of 3500 April put options indicate that Nifty can take some support at the 3500 level in case of a correction.
 

OPEN INTEREST                                                          (In million)
Underlying	19-Apr	18-Apr	17-Apr	13-Apr	12-Apr	10-Apr
Nifty	49.09	47.80	47.13	46.89	47.81	46.38
RIL	20.46	22.23	22.95	22.64	23.72	20.90
ACC	7.76	7.08	7.23	7.20	7.79	7.10
Tata Steel	18.57	18.05	16.98	16.75	17.14	17.40
India Cements	24.04	24.42	24.62	24.58	25.08	22.39
Satyam Computer	13.02	13.01	13.56	15.27	14.38	11.78
Guj Amb Cem	54.32	52.91	54.00	52.45	52.99	52.44
Total	1225.04	1210.09	1192.38	1193.32	1221.13	1173.01

Strong long OI build up was seen in Kochi Refineries (21%), Essar Oil (13%), IOC (10%), J&K Bank (41%), Dr Reddy (12%), Grasim (14%), GAIL (10%), IOB (14%), NDTV (10%) and Sterlite Ind (13%). The stocks are likely to rally in the coming sessions.

Profit-booking was seen in CNXIT (-7100 shares) and in IT stocks like Infosys (-5%) and TCS (-7%). LIC Housing Finance (-2.18 lakh shares), ONGC (2.90 lakh shares) and Reliance Energy (-3.94 lakh shares), too, witnessed profit-booking as OI have declined.

The cost of carry (CoC) has also turned negative in TCS, and one must avoid going long at current levels.