The trading pattern in the futures and options segment suggests the Nifty may stay above 5,100 next week. However, Nifty futures closed at a discount after trading at a premium during most part of the day on account of strong selling above 5,125. This may limit the upside on Monday. However, short-covering by foreign institutional investors (FIIs) in index and stocks futures and a positive close for Dow Jones on Friday indicate the Nifty may breach the 5,160 resistance to move up around 5,200.
Traders were nervous to trade above 5,100 as June futures saw a decline in trading volume by almost 5.5 million shares. The Nifty also moved in a narrow range on Friday as Bloomberg data show that bulk of trades were initiated around 5,100-5,125, mostly to cover short positions. Profit-booking was seen when the index moved above 5,125. In the end, June futures shed 626,600 shares in open interest, mostly through buy trades around the value area, indicating short-covering at lower levels.
The trading in Nifty put and call options suggests consolidation around 5,100 as traders covered shorts at the 5,100-strike call and built fresh shorts at the 5,100-strike put. The 5,000-strike put added significant open interest, mostly though sell trades. Call option traders covered short positions at the 5,000-strike call on expectation of no fresh downside. This means 5,000 may act as strong support for the Nifty.
Reliance Industries, which moved up over three percent, contributed 18 points to the Nifty’s 40-point surge. Reliance is expected to show fresh upside when the market opens on Monday. The market picture data from Bloomberg indicate that Nifty can move around 5,137 based on price projections using the time-price opportunity chart. The price projection for the Nifty based on volume is around 5,158.
