>Daily Derivative (ICICI Direct)

Derivative Comments
• Formation of long positions was witnessed in the Nifty. The March series added 947550 shares whereas the April series added 1.18 million shares. The discount in April narrowed from 14 points to 10 points indicating fresh long build up in the next series

• Huge addition of OI was seen in the 2600, 2700 and 2800 Put options with maximum addition recorded in the 2700 Put with 22708 contracts followed by 2800 Put adding 14634 contracts and 2600 Put adding 12576 contracts. The IVs of these Put options has surged by 5-6% suggesting Put buying at higher spot levels in Nifty. On the other hand, significant short covering was witnessed by Call writers in 2600 and 2700 Call options. The maximum Call OI stands at 2800 with 5.48
million shares. We feel this level could act as a resistance for Nifty on closing basis in today’s session.

Technical Outlook
• The Nifty rallied for the third consecutive session to close in the green by 2.13%. The rally was propelled by realty and oil & gas stocks

• On the daily charts, the Nifty formed another strong bull candle, which is now testing the lower trend line of the joining lows of November 2008 and January 2009. After three consecutive sessions of the rally we remain cautious at higher levels as profit booking is likely. However, intraday dips can be considered an opportunity to buy

• The Nifty spot has supports at 2735, 2700 and resistances at 2785, 2805

To see full report: DERIVATIVES 17-03-09