Buying likely at lower levels

F&O OUTLOOk

The market edged higher for the second day on Friday, but posted weekly losses for two weeks in a row. The S&P CNX Nifty closed marginally above the psychological support of 4,400, while the Nifty August futures contract closed near the 50-day moving average of 4357.

Intra-day profit booking in the last two days of trading forced the market to surrender all its early gains in post-noon sessions.

The market saw a steady buying interest throughout the day on sustained buying demand for index pivotals. Positive cues from the US and the Asian markets boosted sentiment. All BSE sectoral indices posted gains. Shares from real estate, banking and cement were in demand.

The BSE 30-share Sensex rose 152.70 points to close at 15,138.40, while the spot Nifty moved up by 46 points at 4401.55. The market breadth was positive at 1,591 gainer and 1,067 losers, with the small- and mid-cap stocks seeing buying interest. Among Sensex stocks, 23 advanced, while seven declined.

However, after witnessing bloodbath on Friday (July 27) and Wednesday (August 1), the derivatives players are very cautious. These players resorted to intra-day profit booking and were reluctant to carry forward their F&O positions next day. On Friday, Nifty August futures added an open interest of 8.73 lakh shares, while trading volumes were for 231.85 lakh shares.

After Wednesday's bloodbath, the markets have been trading in a rising channel, and this pattern formation, according to analysts, usually implies continuation of previous trend. If the upward channel consolidates further on Monday, Nifty is expected to zoom past the first resistance level of 4434.45.

The trend line support for the Nifty is at 4362, while put/call support is at 4,400 levels.