The Nifty closed above the 3,000-mark on strong buying in metal, capital goods, pharmaceuticals and realty stocks. However, the Nifty April futures closed with a discount to the spot and added an open interest (OI) of 1.51 million shares, indicating that bears have initiated fresh short positions.
The long traders in the Nifty futures were seen buying 3,000 put, while those who expected the Nifty not to go below 2,900 were writing 2,900 put options. Call writing was seen at 3,100 and 3,200 call options, indicating that the Nifty has strong resistance above 3,100.
A blend of buy and sell actions was seen at 3,000 call and put options, indicating a certain section of the Nifty traders was building long straddle at 3,000 levels. Long straddle implies that the market is poised for a big move but traders are not sure which way it will be. So, they buy both call and put.
Nevertheless, the 3,000 put option added an OI of 728,950 shares and the 3,000 call option added an OI of 486,600 shares, indicating that the 3,000-level would be crucial for traders in the near future.
The market, however, came off the day’s high level as traders booked profit in banking, IT and index heavyweights Reliance Industries (RIL) and Larsen & Toubro (L&T) stocks.
Bloomberg data showed that almost 10 per cent volume in HDFC Bank, ICICI Bank, State Bank of India and L&T changed hands in the last 15 minutes, mostly through sell orders.
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The Nifty remained above the psychological 3,000-mark throughout the day and closed at 3,021. The European markets closed in the green, while the Dow opened 75 points higher.