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F&O HIGHLIGHTS

SHORT COVERING WAS SEEN IN THE NIFTY AND BANK NIFTY FUTURES

GO LONG IN NIFTY WITH THE STOP LOSS OF 16200

* The Nifty ended with blockbuster gains on Friday amid strong global cues. Strength in index heavyweight Reliance industries and HDFC twins catapulted the indices higher. All the sectoral indices on the NSE advanced with media, realty and metal index gaining the most. The Nifty ended above the 16,250 mark. The investor sentiments were boosted after China cut its key lending rates and India's Finance Minister projected 8.9% GDP growth for FY23. Nifty finally closed up by 2.89% at 16266.15 levels.

* Short covering was witnessed in the Nifty Futures, as Open Interest decreased by 6.33% while the Nifty increased by 2.89%.

* Bank Nifty Futures saw minor short covering, where Open Interest fell by 0.19 % with Bank Nifty rose by 2.88 %.

* Nifty Open Interest Put Call ratio rose to 1.07 level from 0.80 levels. Among the Nifty options (27-May Expiry), call writing was observed at 16400 - 16500 levels, indicating that Nifty is expected to encounter strong resistance in the vicinity of 16400 - 16500 levels. On the downside, an immediate support is expected between the 16100 - 16200 levels, where we have witnessed Put writing.

* FIIS' short covering was observed in the Index Futures category, where they net purchased worth Rs 3012 Cr, with their open interest falling by 2613 contracts.

To summarise, Short covering in the Nifty and Bank Nifty futures, short covering by FIIs in the Index futures and put writing near 16100 - 16200 levels, indicates that the markets should be viewed with optimism

Therefore, we advise traders to open new long positions with the stop loss of 16200. On the higher side, the 16400 - 16500 levels will act as an immediate resistance

In the Bank Nifty, where short covering has occurred, our recommendation is to remain positive in the Bank Nifty with the stop loss 34000 level.

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