Infy results will set the tone

F&O OUTLOOK

The markets seem to be taking time to settle in the new orbit (Nifty: over 4,400 and Sensex: over 15,000) before moving up.

The benchmark indices have fallen from the day's highs in the last two days on profit booking and each time the participants covered their short positions.

This was indicated by the decline in the Nifty futures discount to the underlying Nifty, which came down from 24-26 points intra-day to 12-14 points at close.

The open interest of the Nifty Put-to-Call ratio edged up from 1.54 to 1.55 as 19.6 lakh shares were added in the put option compared with 12 lakh in the call option. The implied volatility (IV) remained around 19-21, which indicate that the bullish trend will continue.

The Infosys results for the first quarter of 2007-08 will set the tone for all IT companies. The market expectation is that the company will announce a robust guidance despite the rupee blues. The results will thus remove all uncertainties and will pave way for the Sensex to hit 15,500.

The Nifty opened positive in the morning and after touching a new high of 4434.55, fell below 4,400 levels and then closed marginally above 4,400 levels. It continues to appear bullish on the chart.

The short term target of 4490 remains intact. The support levels are placed at 4399 and below that at 4386. With the markets trading within the previous day's range, 4380 automatically becomes a tight stop loss for all long positions.

So far, there is no indication of trend reversal, and for this to happen, 4,300 must break in the next few sessions. The Nifty is likely to face resistance around the 4420-4430 range, above which the index could surge to 4450 in the short-term. On the downside, the index has support around 4380-4390. A break of 4380 could see the index drop to 4340.