Nifty unlikely to cross 4,600

F&O OUTLOOK

The Nifty failed to sustain above 4550, the breakout levels for an upside. The Nifty September futures were down 13 points and closed at 4514 from the days' high level of 4578.70.

The failure of Nifty to sustain above 4,550 levels means there is a possibility of a retest of 4,440 in the near future. While the broad trend remains up, the Nifty unlikely to cross 4,600 levels.

The open interest position in Nifty Put Call options indicate resistance at 4,600 and support at 4,400 levels. This is because operators were writing Call at 4,600 and Puts at 4,400 levels.

It is widely believed that a derivatives player is typically wrong on the market and thus uses contra-market indicators. In other words, overwhelmingly buying calls is bearish, while Put volumes at extreme levels is bullish.

Heavy profit booking was seen in top traded F&O stocks such as Reliance Industries, Reliance Capital, State Bank of India and Tata Steel. All these stocks reacted by over 1 to 3 per cent from day's high levels.

Reliance Capital fell by 3.12 per cent from day's high of 1434.50 to close at 1388.60. The OI in Reliance Capital increased by 2.43 lakh shares despite trading volume of 147 lakh shares.

Reliance Industries reacted by 1.3 per cent from the day's high of Rs 2,069 to close at Rs 2,039. The OI in RIL declined by three lakh shares despite trading volume of 98.46 lakh shares.

The State Bank of India added OI of 1.10 lakh shares despite trading volumes of 67.5 lakh shares. The SBI reacted from the day's high of Rs 1714 to close at Rs 1661.40.

The Put/Call ratio of open interest in Nifty options moved up from 1.53 to 1.55. The Nifty Put options added OI of 14.70 lakh shares while Nifty Call options added OI of 7.23 lakh shares.