The Nifty traded in the range of 2,611-2,655 and closed at 2,645, recording a 23-point rise over the previous close. The Nifty March futures shed an open interest (OI) of 1.85 million shares, while its discount to the spot declined from 32 points to 15 points, indicating that market players had covered their shorts.
The Bloomberg data also suggested short covering as 60 per cent of the total contracts in the March futures were from the buy side.
The 2,600 put options, which witnessed change of hands in Tuesday trades, saw fresh selling today. The OI in 2,600 put options increased by 708,600 shares through put writing, indicating that market players expected the Nifty to trade above 2,600 in tomorrow’s trade. The 2,600 strike call options witnessed a fresh OI build-up, largely from the buy side, at an average premium of Rs 114 per shares, indicating that the index may move up to 2,700.
Technically, the Nifty has strong resistance around 2,660 or 2,680. Hence, the market may see listless trading in coming days.
Option traders were today seen booking profit on 2,700 strike put at Rs 135 premium and selling 2,700 strike call at Rs 68 premium per share. This means Nifty would find it difficult to trade above 2,700 going forward.
The March futures witnessed short covering of 1.85 million shares, the first since the beginning of the March series contracts on February 26.
Reliance Industries (RIL), which witnessed a formation of short position in the past few days, reported short-covering at lower levels.
The stock was up 2.87 per cent from the days’ low and shed an OI of 144,300 shares despite high trading volumes.
Traders were seen buying 1,200 strike call options at a premium of Rs 60 per share, indicating that the March futures could move up to Rs 1,260 from the current close of Rs 1,210.90.