Nifty to face resistance above 3,400

The week-long uptrend was terminated today and the Nifty fell below 3,400 at 3,362. So, weakness is possible till the index touches 3,300 levels. However, since the Nifty has closed above its support level of 3,350, 3,300-level may not be broken. The BSE Sensex fell 3.25 per cent today in its biggest one-day drop in almost a month as investors took profits on a seven-week rally after fresh concerns about the financial sector.

Jitendra Panda, senior vice president of Motilal Oswal Securities, expects profit-booking to continue for some more time as investors and traders are wary of taking long positions due to the expiry of April futures. According to a derivative analyst at Angel Broking, the sharp rise in implied volatility, which took it above the 45-level, also suggests that the ride for the index would not be smooth any further. The analyst suggests that positional long traders in the Nifty should book profits around 3,500-3,520 and move out.

The options traders expect the Nifty to close above 3,300 tomorrow as puts of the April series of this strike hold an OI of 7.19 million shares – the highest among put options. The 3,400 call holds an OI of 4.79 million shares, while the 3,500 call holds an OI of 6.60 million shares, indicating that the Nifty has strong resistance above 3,400 levels.