Nifty may drop further

F&O OUTLOOK

The Nifty closed the week at 3,938 after breaching the 4,000 mark which was an important support level. A further downside in very much possible in the Nifty.

According to analysts at Emkay Shares, the market have also not seen any major build-up of long positions even as a sharp correction was seen across the board indicating that players are still wary of forming long positions at current levels. The players are expecting further downside.

The Nifty Implied Volatility remained at high levels of 28-29 per cent, indicating the markets may depict high volatility in the coming days. One shall avoid bottom-fishing at current levels. Last week's recovery continued on Monday and the Nifty hit a high of 4,177.

From the very next day, however, the index started losing the ground. On Friday, it broke the recent low of 3,965 as well as the 3,951 level, which is 50 per cent retracement level of the whole rally from 3,657 to 4,245.

The Nifty ended the week at 3,938 with a loss of 5.02 per cent week on week. Now if it breaks Friday's low of 3,918 then it may test 3882, which is 61.80 per cent retracement level of the above mentioned rally.

For the short term, the index will turn bullish only if it closes above 4,080. For Monday, the Nifty has resistance level at 3,985 and above that 4,026.
 

F&O SNAPSHOT
	Turnover (Rs crore)*		Open int ('000)**
	Feb 15,07	Feb 23,07	Feb 15,06	Feb 23,07
Nifty	96338.48	95068.02	79462	53979
BANKNIFTY	462.83	329.12	127	98
CNXIT	8.83	18.36	9.00	9.00
Stock	74731.97	116288.8	1347516	1061032
NSE Total	171542.1	211704.3	1427114	1115117
*Weekly aggregates notional value,**In shares