The pullback is expected to continue on Tuesday and the Nifty is likely to face resistance above the 5,270 level. The Nifty June futures closed at a premium to spot and added 3.40 million shares in open interest (OI) intraday, mostly through buy-side trades from top traders. However, by close of Monday’s trade, OI in Nifty futures was up only by 235,800 shares, which indicated short-covering from these same top traders.
According to Bloomberg data, 40 per cent of the volume above the 5,180 level was mostly from buy-side orders from top traders, which suggested there was a strong undercurrent at higher levels. However, profit-booking was seen above the 5,200 level from retail investors. Though Nifty futures closed above the value area, the point of control remained below the mid-point level of 5,170, indicating there was resistance at higher levels.
The trading pattern in the Nifty call options suggested a shifting of support level from 5,050 to above 5,160. The 5,200 and 5,300 call options held maximum OI. The build-up in the last few trading sessions, again, were on account of long-side trades from top traders. This means the Nifty may revisit the 5,300 level if it closes convincingly above 5,270. The put options data indicate strong support around 5,100 level.
Among stocks futures, Infosys Technologies, Reliance Industries and Larsen & Toubro are expected to move up further as these witnessed over 30-40 per cent of volumes above the upper level of the value areas. RCom and Reliance Natural Resources, in particular, showed some strength and are likely to see fresh upside movement in the near future.
Infosys Technologies, which closed at Rs 2,740, is expected to move around Rs 2,765, according to time price opportunity (TPO) data. Reliance Industries, which saw 47 per cent of trades above Rs 1,066, is expected to move up to Rs 1,080 from the latest close of Rs 1,068.
Larsen & Toubro saw 37 per cent trades above Rs 1,704. It is expected to move around Rs 1,732, while Reliance Natural Resources is expected to move up to Rs 71 from the latest close of Rs 61. RCom, which added 1.95 million shares in OI, is expected to move above Rs 186, according to TPO data.