Bull domination to continue

F&O OUTLOOK

The bull grip on the Indian markets tightened further with Sensex and Nifty breaching crucial levels on Wednesday. The Sensex crossed 17,800 to close at 17,847, up by 518 points. Nifty too breached the resistance levels of 5,100 to close at 5210, up 142 points.

The Nifty October futures contract closed at 5,205.60, a modest five points discount to the spot Nifty. The open interest in Nifty October futures declined marginally by 1.14 lakh shares on Wednesday indicating a bout of profit booking by day traders and short covering by bears.

The market pundits now believe that the Sensex target of 20,000 plus and Nifty targets of 5,700 are easily achievable.

A Citigroup technical analyst expects a strong uptrend in the Indian markets, with Sensex target of 19,527 and Nifty target of 5,740 in the next six to twelve months. The index is on a strong uptrend, exhibiting a sequence of higher highs and higher lows (higher tops and higher bottoms).

A major boost for the markets will come on October 12 when the country's private sector oil and gas giant Reliance Industries will hold its annual general meeting.

The market buzz is that the promoters will announce a gift to its shareholders in the form of stock split and probably a bonus issue. Reliance Industries, which closed at Rs 2,393.55 on Bombay Stock Exchange on Wednesday, has appreciated by over 22 per cent in the last one month.

The Put Call ratio of open interest moved up from 1.30 to 1.42 as Nifty Put OI increased by 11.71 lakh shares, while Nifty Call OI decreased by 2.14 lakh shares.

The decline in Call options OI indicate that Call writers do not want take a contra opinion in a bull-dominated market. Put writers, are however, writing out-of-the-money puts as they expect the bull phase to continue.