The indices recovered in the post-noon session on a lower level of support for index heavyweights Reliance Industries, Infosys Technologies and BHEL. However, both the benchmark indices closed with modest losses on selling pressure in HDFC Bank, Housing Development Finance Corporation (HDFC), ICICI Bank, Tata Steel, DLF, Satyam Computer and Hindalco, on financial worries.
The Nifty November futures, which closed at a premium of 10 points to spot, recovered sharply from the day’s low of 2694 to a high of 2849 on short covering at lower levels. The Nifty futures added open interest of 4.17 million shares intra-day, while the entire open interest got settled during the close-out session indicating unwinding of short positions by bear operators.
Siddhartha Bhamre, derivatives and equity analyst of Angel Broking, expects the Nifty to trade in a broader range of 2600-3200 with strong support at the 2700 levels and resistance at the 3000 levels. According to him, the overall trend remains negative but one should not go short at the current level as there is a possibility of the Nifty testing the 3200 levels in near future.
Trading in the Nifty options suggests that the index has support at 2700 and resistance at the 3000. However, some unwinding by put and call writers in the Nifty options was seen at 2800 and 2900 strike puts and 3000 and 3100 strike calls, indicating that options traders expect the Nifty to move above the 3000 levels in the near future. However, the index has strong resistance at 3200 as the Nifty call-put ratio at this level is very high at 7.55.
According to technical analyst Kamalesh Langote of vfmdirect.com, markets continue trading in a ‘falling channel’ developed on end-of-day (EOD) charts. This is a bullish pattern as the recent rally from all-time lows took six trading days while markets have corrected by almost 60 per cent in eight days.