F&O Outlook: Nifty likely to face resistance at 3,800

As expected, the Nifty crossed the 3,700-mark and made an intraday high of 3,717 (May futures 3,729) and retested recent supports. According to technical analyst Kamalesh Langote of vfmdirect.com, the market still holds the buy signal with stop loss at 3,600 levels. The spot Nifty closed at 3,625 from the intraday low of 3,608, while the May futures closed at 3,631 after touching the intraday low of 3,615. The writing of call and put options indicates that the Nifty has support at 3,400 and resistance at 3,800. The market may show some negative move due to profit-booking at higher levels.

The market surrendered its intraday gains due to profit-booking in the second half of On Wednesday’s trading session. The stock futures, which gained by over 3-5 per cent during the morning session, closed around the previous day level as traders preferred to book profit at higher levels. The sugar stocks highlighted this fact with Bajaj Hindustan, Balrampur Chini, Renuka Sugar and Triveni Engineering falling sharply from high levels as speculators surrendered their long positions by over one million shares in each of these stock futures.

The Nifty May futures, which traded at 2-5 points discount in the first half of the session, traded at a premium range of 7-12 points in the second half.

The Bloomberg data suggested that traders booked profit and went short in the Nifty May futures during the morning trade and covered their short positions in the afternoon trade. The May futures closed with a 6-point premium to spot at 3,631 and added an open interest (OI) of 1.02 million shares, indicating build-up of long positions at lower levels.