Confident opening likely

F&O OUTLOOK

The market is likely to open up on Monday, thanks to the positive global cues on Friday. The Dow Jones, Nasdaq and the FTSE were up on Friday when the US Federal Reserve cut its discount rate, or the rate at which it lends to member banks, by 50 basis points to 5.75 per cent.

There was a smart pull-back rally on Friday with the Nifty closing above the 4100 levels after testing the 200-day moving average level of 4050. The BSE Sensex also fell below the 14,000 levels at 13,780 before closing comfortably above the 14,000 levels.

On the upside, the Nifty would face resistance at 4,150 while the Sensex may face resistance at the 14,650 levels. The high implied volatility, which has been there for the last two sessions, indicate caution. The Nifty's Friday close of 4,100 happens to be a 61.8 per cent retracement of the rally from 3,555 to 4,650.

On Friday, the Nifty settled, creating the Hammer pattern, indicating the possible bottoming out of markets in the short term.

The foreign institutional investors were net sellers in both the cash and index futures to the tune of Rs 12,035 crore. The FIIs were net sellers in the cash segment to the tune of Rs 8,278 crore, while the net selling in F&O was worth Rs 3,737 crore.

The market-wide open interest increased by Rs 5,000 crore to Rs 83,800 crore, with the FIIs' share at 35.54 per cent. The rise in open interest indicates the creation of fresh short positions.