The Nifty is expected to open on a positive note on Monday on the back of the US market closing in the green after weak opening. The SGX Nifty closed 50 points up at 4,895 on the OTC exchange compared with the official close of 4,845. Trade data suggest that foreign institutional investors (FIIs) booked profit on Friday and covered short positions at lower levels.
The Nifty maintained its support at 4,800 and closed at 4,845 on Friday on short-covering at lower levels. Trading volumes in the Nifty futures suggest that participants are likely to cover short positions next week in case the index slips below the 4,830 level and book profit above the 4,890 level.
Markets worldwide reacted sharply to the US Federal Reserve’s decision to raise the discount rate. However, the full impact of this move will be felt if it leads to a rise in the Fed’s main policy rate. However, with only four day’s left for the expiry of the current month series, the Indian market will be least affected. The open interest (OI) build-up in the Nifty February futures suggests no fresh build-up of long positions and covering of short positions by bears.
Trading volumes in the Nifty futures show significant short-covering by FIIs. Strong resistance remains at 4,900-5,000 levels and support at 4,700-4,800 levels, based on OI build-up in call and put options.
The Nifty February futures witnessed short-covering of four million shares, as it closed at one point premium to the spot. FIIs covered short positions in the index futures and also booked profit at higher levels, as they expect the Nifty to move in a narrow band next week. However, we may see some stock-specific action, as FIIs have built up short positions in key stocks futures.