Downside may be limited

F&O OUTLOOK

A strong support exists near the 4,000 level as the Nifty 4,000 put has a huge open interest (OI) of 33.8 lakh shares, representing 29.8 per cent of the total put OI.

Resistance for the immediate term exists at 4100 levels as Nifty 4100 call options hold 32.5 lakh shares, representing 33.3 per cent of total call OI. A strong resistance is expected near the 4200-4250 levels on Nifty.

Nifty closed on an extremely weak note on Friday with a loss of 94 points. Nifty futures also traded at a discount of 10-12 points to the spot price. 

F&O SNAPSHOT
	Turnover (rs crore)*		Open int ('000)**
	Apr 20,07	Apr 27,07	Apr 20,06	Apr 27,07
Nifty	77377.32	95483.01	81460	53014
BANKNIFTY	477.71	742.93	190	136
CNXIT	36.97	38.17	20	19
Stock	79409.87	116228.7	1194766	994351
NSE Total	157301.9	212492.9	1276436	1047519
*Weekly aggregates notional Value, **In shares

Analyst Zeal Mehta of Emkay Shares believes that this is just a correction as the implied volatility remained stable at 23-24 per cent levels. It was as high as 26-28 per cent, when we witnessed fall in the markets in past months. The downside is likely to be limited.

Therefore, this correction should be used as an opportunity to initiate long positions. Buying interest is likely to emerge near the 4000 levels, where a strong support exists.

Analysts at HSBC Securities continue with their trading strategy of holding on to positional long as the trend continues to remain up.

Any declines can be used to aggressively buy with a stop loss at trend reversal levels of 13580/13970. The market is displaying volatility and signs of profit booking as selling pressure emerges at higher levels.