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Mixed global cues may dent traders’ optimism

This article was posted on May 13, 2009 and is filed under Press Releases

MUMBAI: Mixed cues from global shores along with Singapore Nifty futures currently trading in the negative territory, Indian markets are likely
to open on a weak note. However, sustained buying by FIIs in index futures and spot segment is likely to keep the sentiments buoyant.

High amount of speculation over the stable government at the centre spurred a stupendous rally in the markets on Tuesday where traders covered their short positions and formed moderate long. This resulted into Nifty futures ending in premium.

On the options front sentiments look bullish. As the markets started recovering mid-noon, players were seen unwinding huge positions (written calls) at 3700 and 3600 calls. Little call writing was seen at 3800 while call buying was observed at 3900 and 4000 levels. On the other hand, enormous put writing witnessed at 3500-3400 levels.

This options build up indicates Nifty to trade above 3700 in near term and support at 3500 level.

Singapore Nifty futures was currently trading at 3656 level, down 31 points from the previous close. In trade so far, SGX Nifty futures opened at 3668 then touched a high of 3671 and low of 3650.

From a discount of 2 points on Monday, Nifty May futures settled at premium of 8 points to the spot. The contract price surged 3.88 per cent and open interest added 6.32 lakh shares from 44.40 lakh shares earlier. The higher buy side quantity indicates covering of short positions and significant formation of long positions in the contract. The cost of carry was positive 5.84 per cent.

“There is a high amount of speculation that NDA might come in power. However, given the low voter turnout the result is still unpredictable. Even the economic indicator IIP is not encouraging. Overall, I feel the market is too overstretched and one should book profits on every rise in their long positions and remain light till the picture is clear,” said Sharath Zha, analyst at Connoisseur Wealth Advisory.

Meanwhile, most Asian stocks rose as forecasts from Olympus Corp and Nissan Motor boosted confidence corporate earnings are recovering from the global recession.

source:economic times


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