Fresh buying could emerge

F&O OUTLOOK

The Sensex closed in the red on Monday, with 19 stocks registering a decline as against 11 advances. But the Nifty, was up by 6.70 points and the market breadth was positive.

Automobile, cement and information technology sectors dragged the Sensex down. But heavyweights such as Reliance Industries, RPL, NTPC, Tata Power and Hero Honda powered the Nifty into positive terrain.

The positive aspect of Monday's trading was the high premium on index futures. The Sensex futures closed at a premium of 121.95 points, with open interest declining by 7,300 shares. The Nifty January futures enjoyed premium of 18 points and the OI rose by 7.02 lakh shares.

Fresh long build-up was seen in Reliance Industries, as the OI rose by 3.28 lakh shares and the stock gained 3.20 per cent. Tata Power gained 6.21 per cent, BPCL gained 6.64 per cent, while Hero Honda was up 5.30 per cent.

The Nifty PCR fell marginally from 1.31 to 1.30, indicating indecisiveness among the players. Support could emerge at 6,000 and 6,100, with a built-up of Puts at these strike prices. Call writing was seen at 6,300 and 6,400, marking these as resistance levels.

The highest Call open interest was seen at 6200, making it as a crucial level. There might be short covering in case the market sustains above this mark.

With the Nifty futures closing above the resistance level of 6,220, buying could emerge in a day of two.

A break-out about crucial resistance is normally followed by buying activity among the market participants.