The Nifty closed on a bullish note on build-up of long positions in index futures and key stocks futures by institutional players. The index is now poised to cross the 5,400 mark, as indicated in this column on April 2 (Friday). The profit-booking in Nifty 5,300 call options and short build-up in 5,400 call options indicate the index may face strong resistance above 5,400.
Nifty April futures closed at 5,366 on strong buy volume above 5,360. Bloomberg data indicate short-covering above 5,360, with strong buy support around 5,330. The April futures closed above the value area (5,320-5,355) and added 1.65 million shares in open interest, indicating long build-up.
The trading volume in Nifty April futures continued to be low, indicating that participants were not willing to take either-side positions at current levels. The only positive development in index and stock futures in the past few sessions has been strong buy trades from big participants. The time-price projection (TPO) using volume indicates strong support around 5,290.
However, the trading pattern in Nifty options suggests the rally may not continue for long. Traders booked profit in 5,300 call options and sold 5,400 and 5,500 calls on expectation of strong resistance above 5,400. The Nifty, however, may not go below 5,300, as traders wrote the 5,300-strike put, indicating a support level.
Strong price movement is expected in key stock futures such as Reliance Industries, ICICI Bank, Bharti Airtel, Tata Steel and State Bank of India. The April futures of the above-mentioned stocks closed below the TPO area, mostly through buy-side trades. Bloomberg TPO projections indicate Reliance can go up to Rs 1,154 and Tata Steel around Rs 682. ICICI Bank is expected to get strong support around Rs 961 and Bharti Airtel around Rs 295.
