Technical indicators on the intra-day chart show positive divergence indicating a limited downside. For the next week, the Nifty would find support at 3980 and resistance at 4280.
According to Ashish Shroff, technical analyst of Ambit Capital, expect a two-way movement next week with 3980 as the turning point for the Nifty. The Nifty maintaining this level on a closing basis may result in a 10 per cent upside and a 10 per cent decline below this level.
Though the Nifty July futures continues to trade at a discount on creation of fresh shorts at higher levels, its discount to the spot Nifty declined from 58 points last week to 33 points at its close.
On a weekly basis, open interest in the Nifty July futures has increased by one million shares despite a weekly trading volume of 208 million. This indicates that the operators were wary and covered their intra-day long as well as short positions.
Options traders expect the downward risk for the Nifty limited to around 3700-3900. This is because put open interest at 3700, 3800 and 3900 strike price aggregated 9 million shares.
