The Nifty moved out of the trading zone (5,095-5,145) today and closed above 5,200 on strong buy volumes from institutional players. After breakout above the resistance levels of 5,150-5,180, the index is poised to cross 5,310 any time now. We had indicated last week that the trading pattern in Nifty futures suggests 100 per cent retracement before the expiry of the March series. Going forward, technical resistance for the Nifty is seen at 5,230 and 5,261.
Bloomberg data show bulk buying (30.3 per cent of trading volume) in March futures above 5,185 in the last 40 minutes despite sell-side trades. This means retail intraday traders booked profit while big institutional player build-up long positions or covered their short positions on expectation of fresh upside from the current levels. The Nifty March futures which closed at a premium to spot witnessed unwinding of short positions around 4 million shares from intraday levels. The short covering was seen in the 5,000- and 5,100- strikes call options, as participants expect that the index is now unlikely to go below the 5,100 levels. However, the 5,300- and 5,400-calls added fresh open interest through buy-side trades indicating hedging of long positional trades.
Interestingly, the 5,200-put 1.94 million shares in open interest mostly though blend of buy and sell side trades indicating mixed outlook by positional traders above 5,200.
The key stocks futures such as Reliance Industries, Infosys Technologies and Larsen & Toubro ruled firm on short covering. The March futures of Reliance achieved the TPO target of Rs 1,062 and closed above value area (Rs 1038-1060) on strong short covering above the 1,060 levels. Infosys Technologies too ruled firm and closed above value area on long build-up. Larsen & Toubro likely to move up further from the current levels as its March futures closed at 1,599.65 on short covering at the higher levels.