Nifty downside capped at 4800; optimism guarded

MUMBAI: The outlook for markets remains that of guarded optimism. Taking cues from US markets, Indian equities may trade positive but will be in a tight range on Tuesday. Foreign funds data shows buying from their side. Nifty put-call ratio rose to 1.46 levels, hinting put writing at lower levels.
US markets gained Monday as a retreat in oil prices boosted consumer shares and the world's largest bond insurer said it has enough cash to cover the securities it guarantees.

Back home, markets bounced back Monday from day's lows. Nifty gained 0.60 per cent to close above 5000. Nifty May futures gained 0.65 per cent on short covering. As indices gained momentum on fresh buying in frontline stocks, bears covered their short positions.

Nifty May futures shedding open interest positions and rise in cost of carry and premium indicates formation of long and covering of short positions.

In options, Nifty calls of strike 5000-5300 shed open interest positions. However, huge build up was witnessed at 4800 put Nifty June expiry, capping the downside in the near term. Also, build up of position was seen at 4900-4800 puts on Nifty May.

In stocks futures, build up of longs was seen in Arvind Mill, Ashok Leyland, Bajaj Holding, Bharat forge, Bhushan steel, Canara Bank, Financial Technologies, Grasim Industries, Hindustan Unilever and Union Bank.

However, short built up was witnessed in ABB, Axis Bank, BEML, Chennai Petro, Edelweiss, Petronet LNG, shree Cement and Tata Motors.

F&O turnover on NSE was Rs 41,000 crore, up 17 per cent from Friday. Foreign funds were net buyers of Rs 225 crore in futures and Rs 324 crore in options.

“Shedding of calls indicates market may see some pull back rally Tuesday. If Asian markets open on positive note Indian markets may trade firm. Nifty will move in a range of 4900-5300," said an analyst with local brokerage.

However, Index of Industrial Production growth at a disappointing 3 per cent for March may continue to weigh on sentiment.

Source : http://economictimes.indiatimes.com