The Nifty June futures added open interest of 83,500 contracts in intra-day trading due to the creation of fresh positions. However, the OI declined in the close-out session, which indicates short covering.
The Sensex, nevertheless, closed at 15,697 (up 302 points), while the Nifty ended at 4,653 (up 81 points). The Nifty June futures traded at a discount of 10 points in the morning session and this widened to 15 points during the later part of the day. The futures finally ended with a discount of 19 points at 4634, accompanied with a marginal decline in the open interest.
The bounceback in Tuesday's session and a close above the resistance level of 4600 suggest the possibility of further consolidation. The daily momentum indicators are up and could thus lead the indices higher.
The positive close is only a pullback and not a trend reversal. According to technical analysts, the bearishness will be negated only by bigger rallies and smaller declines.
A technical analyst at Ambit Capital expects a dip as the intraday momentum indicators reveal an overbought market. This near-term correction could be used as a buying opportunity.
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