Global cues a major determinant

TECHNICALS

Vijay Bhambwani / Mumbai February 7, 2008

The markets opened with a gap down and closed off the intraday lows as some bear covering was seen on declines. The traded volumes were marginally higher as the intraday volatility and wider range saw broader trader participation.
The market breadth was weak as the combined exchange figures were 1719:2241 and the capitalisation of breadth was also negative on a commensurate basis, with the figures being Rs 8465 crore:Rs 11595 crore.
The indices have closed at the lower end of the intraday range and on negative market internals. The intraday range specified for Wednesday at 5430 / 5540 was violated on declines as the selling pressure was significant.
The coming session is likely to witness an intraday range of 5190 on declines and 5450 on advances. Watch the traded volumes in case of an upthrust beyond the 5400 - 5420 levels, which need to spike higher if the bulls are to extend their initiative over the bears.
The market internals indicate a marginally higher turnover as the participation levels rose mildly. The number of trades increased and the average ticket size was lower, indicating the absence of stronger hands. The capitalisation was lower in line with a downtick session.
The outlook for the coming session remains guardedly optimistic and much will depend on the overseas cues. Avoid big ticket trades for now.

Short positions make a comeback

F&O OUTLOOK

B G Shirsat / Mumbai February 7, 2008



The technical pullback fizzled on Wednesday, with the Nifty and Sensex making substantial losses. The current month Nifty futures traded at a discount and added open interest of 33.11 lakh shares, indicating that shorts are back.
Most importantly, the first four trading days of the current contracts have seen a built-up in open interest near the Nifty 4,700 and 4,800 strike prices.
The OI in 4,700 Put has increased by 32.6 per cent to 8.34 lakh shares in four days, while 4,800 Put has witnessed 72.3 per cent increase in OI to 4.46 lakh shares.
The 4,700 Put options witnessed hectic activity on Wednesday, with 6,312 contracts of 50 shares each being traded at a premium of Rs 75 a share. The 4,800 Put options were in demand as 4,817 contracts were traded at a premium of Rs 115.65 a share.
The down side premium of 10-15 per cent on the 4,700 and 4,800 Puts indicated weakness in the near future.
According to Kamlesh Langote of vfmdirect.com, the bounce-back is over and the previous downturn will now continue. Technically, price-wise corrections are followed by time-wise corrections and we are heading for Nifty levels of 4,500-4,600 and 15,500-16,000 on the Sensex.
For the time being, the Nifty has a support at 5,200, 5,100 and 5,000, going by the open interest build-up in Put options at these levels.
Resistance is seen around 5,400, 5,500 and 5,600 levels as there has been Call OI built-up at these points. The Nifty PCR remained unmoved at 1.08, indicating nervousness among the market participants.