The Nifty maintained its support of 4,667 and closed at 4,760 on short-covering at lower levels in index futures and key stocks futures.
However, profit-booking in Nifty futures and short-covering at 4,800 and 4,900 strike put options suggest the index may face strong resistance above 4,800. The SGX Nifty futures traded around 4,722 over the counter on the Singapore exchange, indicating weakness.
In options, the 4,800 call saw change of hands till afternoon and short-covering thereafter. The 4,800 call shed 14,850 shares in open interest despite trading volume of 15 million shares, which indicated that traders expected the Nifty to trade around this level in the near future. The open interest in the 4,900 call rose marginally despite huge trading volumes, indicating profit-booking and continued resistance above 4,900. The build-up in open interest in call and put options suggests resistance at 4,900-5,000 and support at 4,700.
The Nifty February futures saw change of hands and profit-booking from bulls as they closed at a premium to the spot and shed 84,250 shares in open interest despite trading volume of 36.6 million shares.
Bloomberg data suggested that traders were booking profit when the index started trading above 4,750 while short-covering was seen below 4,690. Over 50 per cent volumes changed hands, mostly through sell-side trades, at an average level of 4,771, indicating profit-booking at higher levels.
The Nifty managed to pull back above 4,700 on short-covering. Otherwise, the trend looked decisively down and the possibility of the index breaching the 200 daily moving average level of 4,650 was quite high.
Technically, weekly & daily charts remain bearish and a counter-trend pullback till 4,820 will provide more opportunities to sell, indicate technical analysts at Edelweiss Research. The Nifty is likely to test 4,600 in the current move, they say.
