The Nifty on Monday re-visited the January 10 high. It closed at a 25-month high on strong support below 5,300. The trading pattern in Nifty futures and key stock futures suggests the index may face strong resistance above 5,350 and slip below 5,300 in the near future on account of profit-booking. The time-price opportunity (TPO) support is seen at 5,280.
Nifty April Futures moved in a narrow range of 30 points with almost 76 per cent volumes changing hands at 5,300-5,330, indicating lack of interest above higher levels. Retail participants booked profit above 5,330 while bulk buyers accumulated April futures at higher levels. However, April futures closed at a premium of 16 points to the spot and added 797,250 shares in open interest, indicating long build-up.
Bloomberg data indicate profit-booking in 5,200- and 5,300-calls by retail participants and long build-up in these by bulk buyers, probably institutions. However, the 5,400-call added 683,400 shares in open interest, mostly through buy-side trades, indicating hedging of short positions.
The 5,200- and 5,300-puts also added substantial open interest, mostly through buy-side trades, which indicates that bulls are hedging long positions. However, strong positive movement is expected around 5,400, as the 5,400-put added 493,100 shares in open interest through sell-side trades.
Among stock futures, Larsen & Toubro (L&T), ITC, ICICI Bank and Reliance Industries saw long build-up by institutional players. Hindalco and State Bank of India moved in a narrow range due to lack of buying at higher levels. Traders booked profit in Infosys Technologies, TCS and Wipro on account of the hardening of the rupee.
L&T and ITC closed above the value area on strong buying at higher levels. Projections using TPO charts indicate that L&T can move up to Rs 1,682 while ITC can move up to around Rs 280. ICICI Bank is looking strong and may move around Rs 960. Reliance Industries is expected to move around Rs 1,125.
