India stock futures end higher on fresh buying

MUMBAI, July 4 (Reuters) - Indian stock futures rose on Friday as investors built fresh buy positions in the index and futures of most major sectors, but analysts worried if the gains would be sustainable next week.

Nifty July futures NIFc1 ended 2.6 percent higher at 3,979.05 points, while the benchmark spot Nifty index closed 2.3 percent higher at 4,016 points. Discount eased to 36.95 points from 46 points on Thursday.

"There was build-up of long positions in the Nifty. The market is showing strength in the pull back. We have to see if the market can consolidate at these levels," said Chirag Mehta, institutional dealer at Prabhudas Lilladher.

Buying, indicated by the increase in open interest, was seen in several banking, construction, capital goods and metal shares. Others such as auto and real estate stocks saw some short-covering.

With quarterly results likely to stream in from next week, Mehta said, he was also bullish on mid-cap information technology stocks.

However, analysts worried over the sustainability of the positive sentiment, given the high discount and volatility.

"Implied volatility is still hovering around the 39-40 percent levels. Uncertainty about the trend is the reason for the high IV," said Sameer Shetye, analyst at Emkay Shares & Stock Brokers.

Technical analysts see 3,800 as a strong support for the Nifty, while 4,100 points is seen as immediate resistance.

TOP FIVE CONTRACTS BASED ON OPEN INTEREST ---------------------------------------------------------------- ------ COMPANY NAME RICS