Volatility should continue

F&O OUTLOOK

Short covering at lower levels helped both the Sensex and Nifty futures to close on a positive note, while the spot indices recovered sharply to post modest losses over Friday's close.

The Nifty November futures closed at 5641.40 against Friday close of 5628.70 and Sensex futures closed at 18,890 compared with the previous close of 18,747.

The Nifty futures closed at a premium of 24 points to spot Nifty and the futures open interest increased by 10.60 lakh shares.

Sensex futures traded at 153 points premium to spot Sensex, with the open interest increasing by 25,475 shares. This, according to an analyst at Pinc Research, has been largely because of short covering by bear operators.

The BSE Sensex recovered by 400 points from the intra-day fall of 574 points to close 170 points lower at 18,737. The S&P CNX Nifty retraced 140 points of the intra-day loss of 188 points to close 46 points lower at 5,617.

The market will remain volatile going ahead, with the Nifty trading within a range of 5000 and 6,011. The Nifty PCR ratio moved up from 1.14 to 1.16.

The Nifty put options added OI of 10.69 lakh shares, while call options added 6.84 lakh shares. Profit booking was seen at the 5,700, 5,800 and 5,900 strike prices in case of call options as the OI at these levels decreased accompanied with a decline in premium.

The Nifty put options open interest increased by 2.84 lakh shares near 5,500 strike price, indicating this as a significant support level in case of a further correction.

According to Ketan Chaurasia, derivative analyst, Pinc Research, short covering was seen on Bharti Airtel and Tata Power. NTPC has witnessed fresh long positions.