Markets may consolidate

F&O OUTLOOK

Both the index futures closed at a premium to spot indices, indicating an end to the corrective phase. On Monday, there was short covering at lower levels and built up in long positions thereafter.

On Tuesday, the bears covered shorts in early trade and built long positions as soon as Nifty crossed 5,650. Profit booking crept in near 5,790 levels, which wiped 80 points from the intra-day gains of 142 points.

The Nifty November futures closed at a premium of 12 points, with 4.74 per cent decline in open interest, indicating that short covering in Nifty futures was almost getting over.

According to Sahaj Agarwal, analyst, Kotak Securities, the markets will be ranged and are likely to consolidate in the coming days. Strong support is seen at 5,700, while resistance is near 5,800 levels.

According to Sahaj Agarwal, banking and power sectors stocks look good. Reliance Energy, NTPC and Power Grid Corporation are likely to move up further as technical charts show strong long term movements.

Among banking stocks, the public sector giant State Bank of India is a strong candidate for modest to sizeable gains in the near future.

Reliance Energy futures gained 1.78 per cent, with the open interest remaining intact at the previous day's levels. NTPC futures gained 7.42 per cent, accompanied with a 9.14 per cent increase in OI indicating fresh long positions. SBI was up 2.48 per cent, with a 3.38 per cent increase in OI, indicating consolidation of long positions.

On the options front, there was strong resistance at 5,800 levels as the call OI increased by 10.3 per cent at that level. Profit booking was seen at 5,900 levels, while call writing was seen at 6000 levels. This indicates that the Nifty has strong resistance at 5,900 and 6000 levels.