Markets ripe for a breakout

F&O OUTLOOK

The markets opened open weak on negative global cues and slid further due to the budget proposals. The bulls conceded defeat, whereas bears increased their shorts despite the widening discount. The FIIs aided the weakness by selling securities worth Rs 335 crore on both the exchanges.

The Nifty March futures contracts closed at 5,181, down 74 points. The discount to spot Nifty widened to 42 points from 31 points and the open interest increased by 11 per cent or 38.89 lakh shares, showing that short positions were carried forward.

The markets, however, saw a strong support at 5,100 levels, with spot Nifty gaining by 123 points from the day's low of 5099 to close at 5,223.50.

The Nifty futures recovered by 129 points from the day's low of 5,052 to close at 5,181. With the futures reversing from 5050 levels four times in three weeks, the market may be ripe for a breakout.

The stock futures of GlaxoSmithKline Pharmaceuticals, Reliance Petroleum, Punjab National Bank, State Bank of India and Maruti Suzuki surged by over 3-7 per cent on fresh long positions, while Reliance Industries, Suzlon Energy, Unitech and HCL Technologies declined 3-6 per cent due to the creation of short positions.

The Nifty PCR declined further to 1.21 from 1.43 on first day of the new derivatives series. Call options added 24.56 lakh shares and Put options added 17.77 lakh shares in open interest. Put writing took place at 5000, 5100 and 5200 strikes.