The Nifty opened in the positive territory but remained range-bound throughout the day. The index closed below 2,800 at 2,780, down 23 points led by losses in Reliance Industries, HDFC, Larsen & Toubro, Sterlite Industries and Tata Motors. ICICI Bank was up 0.2 per cent, while State Bank of India (SBI) and HDFC Bank closed in the red.
The Nifty February Futures were trading in the range of 20 to 25-point discount to spot during the morning trade, but expanded to around 25 to 30-point in the second half of the session. The February futures closed with a discount of 12 points as futures and options (F&O) players covered their intraday positions towards the end of the session.
The Bloomberg data showed that Nifty futures witnessed selling pressure during the afternoon trade with 61 per cent volumes changing hands at an average index of 2,761. The index saw short-covering in the last 30 minutes with 16 per cent shares changing hands at an average index value of 2,767.
At close, the open interest (OI) in the February futures declined by 1.29 million shares, indicating unwinding of long positions.
Technically, Nifty markets are trading in the ‘no-interest zone’, meaning a dull trading sessions. The overall volumes are decreasing day by day, clearly suggesting that market participants are not interested in trading as long as Nifty trades in the range of 2,700-2,850, says analyst Ashish Shroff of Ambit Capital. As long as Nifty trades above 2,700, one could use this consolidation as a buying opportunity with stop loss at 2,700, he adds.
Both Sensex and Nifty continue to be in a distribution period and an outcome of which is likely within the next two-to-four trading sessions.
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Any major decline from the current levels would be triggered by either weak global markets or local news flow. Many index heavyweights continue to look weak on the charts and hence technical analysts are expecting a sharp correction in case the Nifty closes below 2,700.
The 2,800 call options on Thursday shed OI of 309,900 shares, while 2,700 put options added OI of 522,600 shares, indicating that the market has resistance above 2,800 and support at around 2,700-level.