As expected, the Nifty closed below 4,900 on profit-booking and weak global cues. The build-up of open interest in the 4,900 strike call options suggests the index is likely to face strong resistance above 4,900.
The market is expected to open on a weak note with support at 4,820 and upside resistance at 4,920. Based on open interest build-up in the 4,800 strike put, the market expects that the index is unlikely to go below 4,800 in the near future.
Nifty February futures is trading at a negligible discount to the spot, which indicates that bears are covering short positions. The February futures shed over two million shares in open interest during intra-day trades, mostly through buy-side trades below 4,880.
Nifty March futures traded at a discount and added 682,100 shares in open interest. Bloomberg data suggest change of hands from buyers to sellers above 4,910, indicating short build-up.
Strong resistance is seen from the trading pattern in 4,900 call options, as open interest in this call rose marginally despite an intra-day trading volume of 13.23 million shares.
Also, the 4,900 put shed 263,300 shares in open interest, mostly through sell-side trades, indicating profit-booking. This gives us a clear indication of range-bound trading with support below 4,880 and resistance above 4,910.
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Reliance Industries fell 3 per cent and despite a trading volume of 6.29 million shares, the open interest in its February futures remained the same, indicating profit-booking.
Chambal Fertilisers is expected to rise further as the stock was up 5.5 per cent and saw long build-up of 0.81 million shares on expectation of a favourable fertiliser policy.