F&O Manual: Analysts see chances of Nifty bouncing back

The market was trading lower in the morning on March 24, mirroring the weak trends across the globe as lingering concerns over banking systems pushed investors on the edge. At home, traders expect weakness to persist during the session.

At 10.38 am, the equity benchmark Nifty was trading 43.60 points or 0.26 percent lower at 17,033.30. Nifty futures, too, were down 42.15 points at 17,045.35.

Among put options, maximum accumulation of writers was at 17,000, which suggests it will be the key level to defend during the day. Call writing was also seen at 17,100 and 17,200, which indicates multiple hurdles in the Nifty's path to recovery.

Rupak De, Senior Technical and Derivative Analyst at LKP Securities, expects a bounce-back as the Nifty had slipped into an oversold zone. He foresees a recovery as long as Nifty sustains above 16,900-17,000. De also suggested investors willing to take the risk to initiate a bull-call spread to cash in on the recovery.

Weakness in the market also spilled across sectors. Similarly, in the F&O segment, most sectors saw the addition of short positions, which is a bearish sign.

HDFC Asset Management Company saw a massive buildup of short positions as open interest shot up to 15.6 percent, the highest in a quarter. The jump in open interest was coupled with a sharp hike in volumes that touched a one-month high.  A short buildup is a bearish sign which happens when prices fall along with a rise in open interest.

ABB India, Jindal Steel and Power, Adani Enterprises and AU Small Finance Bank were other counters to see short buildups.

On the other hand, Aurobindo Pharma saw the maximum addition of long positions, as open interest in the counter jumped nearly 6 percent. Other stocks to long buildup were IndiaMart InterMESH, Crompton Greaves,  LTIMindree and Infosys.

A long buildup is a bullish phenomenon characterised by rising prices along with an increase in open interest.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.