Market may open higher as F&O bears crash out

The benchmark Nifty index of the National Stock Exchange (NSE) may open higher by 100-150 points and the BSE’s Sensex may set a new record on Monday, analysts said, as investors look to close out bearish bets in futures and options (F&O) following the saffron sweep in the Hindi heartland.

- Ram Sahgal

The Bharatiya Janata Party’s (BJP) victory in Rajasthan and Madhya Pradesh and surprise sweep in Chhattisgarh exceeded exit poll predictions by a wide margin, reinforcing its likelihood of winning the national election next year, they added.

The Nifty may test 20,500 levels, thanks to short-covering by foreign portfolio investors (FPIs) as well as retail and high net-worth option sellers. Ahead of election results, FPIs held net short futures positions of 47,161 Nifty and Bank Nifty contracts, and net long index put options totalling 240,625 contracts. Analysts expect them to cover at least some of their short futures positions and reduce their puts. Short-covering means buying back contracts sold earlier, which adds to upside momentum.