The Nifty remained above its immediate support level of 4,200 throughout the day on Wednesday and closed just below the resistance level of 4,300 on short-covering ahead of the monthly derivatives expiry. Rollovers in the index and stock futures were low, indicating that Futures & Options (F&O) traders were not willing to take positions before the Union Budget.
The trading pattern in the Nifty options suggested that the index should settle at around the 4,300-4,350 level on expiry. Profit-booking was seen in 4,200 and 4,300 calls of the June series as traders expected a range-bound trading tomorrow. Though only a day remained for the expiry of the June series, 4,200 and 4,300 puts of the series together added an open interest (OI) of 1.95 million shares, indicating that the Nifty would not go below 4,200 and would settle around 4,300.
The Nifty July futures closed at a premium to the June futures, but total rollovers were lower at 14.55 million shares compared to 20.53 million shares in the June series same time last month. This indicated some long build-up ahead of the Budget and unwinding of short positions at lower levels. The rollovers in 18 Nifty stocks, including Reliance Industries (RIL), ICICI Bank and Bharti Airtel, were lower by 10-79 million shares, while in 13 others the same were lower by 500,000-900,000 shares.
Technically, the Nifty could go up to 4,500-4,650 once again to complete the head-and-shoulder pattern, said Kamalesh Langote, technical analyst of vfmdirect.com. The index had a strong support at 4,100, said Langote, adding that if this level was broken, then the index could go down up to 3,500. Nevertheless, the 4,000 strike put of the July series added an OI of 288,500 shares mostly through buy bids, which indicated that the index could test 4,100 levels in the new series.
