The Nifty opened on a negative note on Tuesday and breached yesterday's low. However, the index got support at the 3,700 level and bounced back, finally closing at 3,921 with a gain of 71 points. The rebound was expected as the Nifty October futures hit an intraday low of 3,773 against the spot market low of 3,715, indicating that are no sellers in the index futures below 3,800.
The Nifty has held its previous low at the time of closing, which is a good indicator for the market to recover further in the coming days, says Kamlesh Langote, a technical analyst at vfmdirect.com. He expects the index to move up to 4,100-4,200 this week as long as it holds on to the 3,800 level.
According to a technical analyst at Ambit Capital, the Nifty could face resistance at 3,980 and later at 4,040. The market has lost momentum on the upside and downside, suggesting that it may trade sideways in the range of 3,800 to 4,200.
The F&O data for the day show that support for the Nifty is building around 4,100, while strong resistance is seen around 4,200. The Nifty put-call ratio of the open interest (PCR OI) at the 4,100 strike is 1.39, favouring the bulls, while PCR of the 4,200 strike at 0.58 favours the bears. The PCR above one indicates put writers' support for the index, while PCR below one shows call writers' resistance against the index.
Bloomberg data shows that 35 per cent of trades in the Nifty futures were in the first two hours at an average strike of 3,835, with more orders executed through the buy side than the sell side. The Nifty witnessed profit-booking above 3,930, even as 17 per cent of the total volumes in the October futures were recorded in the last 30 minutes of trade at an average strike of 3,934.
