The Nifty closed in the red with a week-on-week loss of 175 points as the corporate governance issues hit headlines. The FIIs and DIIs also supported the decline by pulling out Rs 2,000 crore in the last two days.
FIIs were net sellers in index futures and increased their open interest positions in index futures from 423,972 contracts on Wednesday to 510,338 contracts on Friday. The New York exchange and other European markets were down by around 1.50-2 per cent on Friday, indicating a weak opening on Monday.
Technical analyst Kamalesh Langote of vfmdirect.com expects that bears will tighten grip if the Nifty closes below 2,812. Incidentally, markets hit a low of 2,810 on Friday and recovered. He expects a short build-up, if the Nifty is unable to sustain above 2,930. There is also a possibility of more short covering if the index breaks and closes below 2,800.
Ashish Shroff, technical analyst of Ambit Capital, expects the Nifty to get strong support at 2,800 and also bounce back till the 2,950 to 2,980 levels. The fall over the last two days was extremely sharp and therefore bounce back is on the cards. On the upside, the resistance for the Nifty is at 2,980 and this would be the reversal point of the downtrend.
The January futures closed at 2,863, a 10-point discount over spot, while open interest increased by 717,750 shares, indicating a short build-up. The derivative statistics data culled from the NSE website show that FIIs were net sellers of 1.08 million shares on Friday. This means while the FIIs have build up fresh shorts, bulls unwound their long positions in the Nifty futures on Friday.
Huge unwinding in 2,900 and 3,000 puts and build-up in 2,800 and 2,700 put options have been observed on Friday, indicating that the index has support at 2,700-2,800 and resistance between the 2,900 and 3,000 levels. Traders were seen booking profit at 3,000-3,300 strike calls and writing 2,800-2,900 strike calls indicating that the Nifty has strong resistance above the 3,000 level.