Build-up in new long positions

F&O OUTLOOK

Profit-booking at higher levels halted the Sensex's march towards new highs. The BSE Sensex declined by 455 points from its day's high of 20,238, while the Nifty retreated from the day's high of 5,976 to close at 5,869.

An encouraging sign for the bulls has been the Nifty's November futures, which closed at premium of 16 points.

According to technical analyst Kamalesh Langote of vfmdirect.com, Tuesday's decline is no cause for worry. Market players took profits home and the upward move remained intact. The support exists at 5,700-5750 levels and there is a concern only if the levels are breached.

On Tuesday, the Nifty broke the 5,922 barrier and tested the 5,976 level to close at 5869, almost 10 points below its support at 5,878.

Technically, the Nifty broke its all-time high of 5,736 on Monday and the Nifty November futures came close to pierce through the 6,000 level on Tuesday, with the bulls eyeing 6,402 and 6,804.

The open interest in the Nifty November futures contracts increased by 13.51 lakh shares (4.75 per cent) despite a 39-point fall in the Nifty futures.

This, according to derivatives analysts, has led to a build-up of fresh long positions. The put-call ratio (PCR) of the Nifty options moved up from 1.20 to 1.24 as the Nifty put options added OI of 11.75 lakh shares, while call options added OI of 6.60 lakh shares. The five-day relative strength index (RSI) on Tuesday declined to 76 from yesterday's level of 83.

Among the stock futures, long position was seen in ABB, Siemens, Sterlite Industries, Tata Power, Reliance Energy and Reliance Petrochemicals. The OI in these stocks increased with an upward movement of futures prices.