The markets remained volatile throughout the day on account of delivery-based selling by foreign investors at higher levels and short covering by bears at lower levels.The Nifty closed 20 points lower at 4,838 after hitting the day's high of 4,949.60. The Nifty February futures closed 15 points lower, with the discount narrowing from 47 points to 43 points.The FIIs were net sellers worth Rs 498 crore, going by the provisional figures provided by the stock exchanges. The bears covered their shorts at every intra-day decline, if the volumes in Nifty futures is anything to go by. Despite trading volumes of 5.97 lakh contracts, valued at Rs 14,506 crore, the open interest in Nifty February futures remained unchanged at 41.16 million shares.Short covering may lead to a minor recovery in the next few days, according to technical analyst Kamlesh Langote of vfmdirect.com. The recovery, however, should be used for profit-booking as any technical bounce will be limited to 5,000. The Nifty has a support near 4,750 levels, while the downward target remains 4,600.Anand Kuchelan, derivatives analyst at PINC Research expects the sideways movement to continue for some more days in the absence of fresh buying. There is a pressure of delivery-based selling and total absence of delivery-based buying, he said. The FIIs remain net sellers, taking the net outflow to Rs 33,000 crore in the 26 trading days of this calendar year.The Nifty PCR of 0.84 and five days relative strength index (RSI) at 20 indicates oversold positions.Call writing of out-of-the money Calls was seen at 5,300-6,000 strikes, indicating these as resistance levels. Put writing at 4,700-4,800 levels shows a support at these points.
