The S&P CNX Nifty and BSE Sensex ended on a cheerful note for the fifth consecutive day, amid steady trading activity.
There was a fresh long build-up in Nifty futures and intra-day short covering in the 4600 and 4700 call options. The Nifty’s support level has moved from 4500 to 4600, going by the put writing at the 4600 strike price, and this should lead to further consolidation.
The Nifty August futures added open interest of 1.47 million shares out of the total trading volumes of 24.51 million shares, indicating a build-up of fresh long positions. The premium has shrunk from a high of 30 points to 13 points, while the open interest has increased by 4.7 million shares in the last six trading days.
Banking counters, especially private sector banks, saw huge buying in the cash segment and short-covering in derivatives. ICICI Bank was up 4.5 per cent, HDFC Bank rose 1.7 per cent and State Bank of India appreciated by
4.8 per cent on short covering The Nifty is expected to face a stiff resistance at 4700 (Sensex 15,750) as option traders sold calls at 4700 and 4800 strike prices. Sellers expect the markets to trade below these levels for some time.
According to a technical analyst at Ambit Capital, one could expect an intraday correction as the momentum indicators on the intraday charts are overbought. The Nifty is expected to consolidate in the 4580 to 4640 range before moving upwards and targetting the short-term level of 4850.
