Bulls in command

F&O Outlook

Extending the party mood prevalent in the early part of last week, the markets surprised analysts on Friday by hitting lifetime highs.

The Nifty January futures settled at a discount of 10, indicating that bulls were in complete command. The Nifty futures open interest (OI) increased by 3.73 million shares to 35.52 million shares and futures were up by 145 points to close at 6,264.

The FIIs were net sellers in cash and stock futures. They sold shares stock worth Rs 1,000 crore in the cash market, while disposing stock futures worth 3,485 crore on the NSE.

They hedged their positions by buying index futures and index options.

The last week's rally was centered on large cap stocks, oil and gas, FMCG and power stocks.

Short covering was seen in BPCL, Reliance Energy, Sterlite Industries and Suzlon Energy, as the prices of these stock futures rose accompanied with a decline in the open interest. BPCL shed open interest of 1.21 lakh shares, while the stock was up 11.18 per cent. Reliance Energy rose by 15.23 per cent, whereas its OI declined by 15 lakh shares.

Short positions were seen in IT, cement, pharmaceuticals and automobile futures. Adlabs Films, Reliance Natural Resources, MTNL, Parsvanath Developers and IFCI were in demand and are likely to hit the permissible market wide limit in the coming week.

The Nifty continued its move in a rising wedge. It did witness both trend-line and psychological resistance at 6,300. Support at 6,230 would keep the positive momentum intact and this, in turn, would help the Nifty to move into uncharted territory.