MUMBAI: Snapping a three-day winning streak, Indian markets fell Wednesday led by profit booking in realty, power, metal and IT stocks. The negative opening of European stocks washed out the expected recovery of the indices in the afternoon. National Stock Exchange’s 50-share Nifty slumped 2.87 per cent to close at 2954.

Nifty December futures provisionally settled at a discount of 13 points to the spot. The contract price dropped 3.5 per cent while it added 31 lakh shares in open interest. The sell quantity was twice that of the buy. This suggests build up of short positions in the contract.

In the early trade, Nifty was heading towards 3040 level, while players went short in the contract which dragged the spot in the late trade. The discount widened in late trade when Nifty was around 2080 levels.

As bears dragged the markets down in late trade, bulls unwound their written puts at strike 3000, 2800 and 2700 levels while bears bought puts at 2900 strike. Huge call writing was seen at 3000 and 3100 levels. The options data indicates some correction is on cards.

“As expected, Nifty traded in a band of 2950-3050 levels. The higher volumes can be a turning point at current levels as it may signal a downward breakout. The support for the markets has once again came down below 2700 levels while resistance at 3000 levels. Market players are expecting a rate cut from RBI on the back of cooling inflation (expected at 7.49%). Yet, the overall trend seems to be down for markets. I will advise players to buy put on every rally unless Nifty decisively breaches 3100 on closing basis,” said Sameer Chandra, fund manager at Global One.

Players have built shorts in frontline stocks like Reliance, SBI, DLF and Satyam Computers. Reliance Industries December fell 3.44 per cent while added 8 lakh shares in open interest. The contract was trading at a discount of Rs 10. Satyam Computers futures slumped 31 per cent while open interest added enormous 86 lakh shares.

State Bank of India dropped 4 per cent while OI added just about 1.3 lakh shares while ICICI Bank gained 1.96 per cent. After rallying for the past few sessions, DLF slumped 9 per cent and attracted short positions in the contract. Bharati Airtel plunged 5 per cent and Reliance Infra plummeted 15 per cent.

Total F&O turnover on NSE was at Rs 49360 crore, up 26 per cent from previous trade.

Meanwhile, European stocks and U.S. index futures dropped led by banks, after the Federal Reserve cut interest rates to zero, leaving the central bank with fewer tools to combat the worsening global recession.

source: Economictimes

Tags: calls, daytrading, free calls, intraday, tips

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