The Nifty may be all set to achieve its next target of 3,740. The only concern is that the index today closed flat, indicating uncertainty among traders. However, the Nifty May futures witnessed buy side trades, which suggested that the futures and options (F&O) traders were bullish and that they expected the index to achieve the 3,740 target.
The options traders seemed certain about the Nifty crossing the 3,700-mark in a day or two with an upside target of 3,800. A few traders seemed wary of the 3,800-mark and were seen buying 3,800 strike call and put options. The buying of the same strike calls and put options (long straddle) indicated uncertainty and hence the market should expect a sharp movement on either side in the near future.
Nevertheless, further consolidation was also on the cards and the Nifty might even move past the 3,900-mark before the general election results are out. This was indicated by short-covering and build-up of fresh long positions of 210,200 shares in the 3,900 strike call options. The 3,600-mark is expected to act as the new support level as the 3,600 put added an open interest (OI) of 501,800 shares through writing of put options.
The Nifty May futures witnessed short-covering of 1.41 million shares during the intra-day trade and added an OI of 259,850 shares, indicating fresh long build-up by bull operators. The Nifty June futures too witnessed short-covering and fresh long build-up of 52,500 shares.
The stocks that would take the lead for any fresh upside are Reliance Industries (RIL), ICICI Bank, DLF and Tata Steel. The RIL stock is expected to cross the Rs 2,000-mark as traders were seen buying the Rs 1,920 strike call options at a premium of Rs 86 per share.
The ICICI Bank scrip is expected to cross the Rs 600-mark as traders were buying Rs 580 strike call options.