The Nifty opened today on a negative note and closed below 2,939, lower than the support level of 3,000. A strong build-up in the open interest (OI) at 2,900 and 2,800 strike puts indicates that the index has support at 2,900 and below that at around 2,800.
According to technical analysts, Monday’s Nifty rally, where the index closed above 3,100, was short-lived. The rally lacked support from traders and volumes in the F&O and cash markets were down to a new 15-month low.
Technical analyst Ashish Shroff of Ambit Capital expects the index to trade in the range of 2,850 to 3,250 and sees consolidation before it begins its downward journey. The intraday indicators were in the neutral zone, but the broader trend now remains subdued, with the index’s medium-term target at 2,600 and reversal at 3,200.
The trading volume in the cash segment remained weak, but it has increased by 33 per cent in the F&O segment as operators preferred to unwind long positions on account of weak global cues.
Key stock futures such as Reliance Industries, State Bank of India, Reliance Communications, Bharti Airtel, Infosys Technologies and Tata Steel witnessed either a decline or a marginal rise in their OI due to profit-booking.
Reliance Industries’ November futures witnessed 30 per cent trading volumes only half-an-hour before the close of trading at an average price of Rs 1,204, indicating selling pressure even as the price crashed from Rs 1,300 to a low of Rs 1,191.
November futures closed at a discount of 17 points today from a premium of 12 points to the Nifty spot yesterday as traders rushed to sell their long positions. The Nifty futures witnessed 32 per cent trading volumes in the last 45 minutes of trade at an average of 2,943 points. The Bloomberg data indicate that most of the big trades were from the sell side.