The Nifty broke the support of 2,920 in today’s trade and closed at 2,916 as F&O traders were indecisive ahead of the quarterly earnings due next month.
On weekly charts, sell will be generated if markets close below 2,920 this week. This will be an important support and crucial trend decider.
The volume on the F&O segment was unusually low on expiry day as bulls were cautious ahead of the Christmas holiday and hence unwound their long positions. Bears seemed to have rolled over their short positions as the Bloomberg data suggested that sellers were active in the Nifty futures and key index futures.
The Nifty January, however, added open interest of 7.60 million shares at a premium of 23 points, indicating that some traders had rolled over long positions. Among key stock futures, Reliance Industries, Larsen & Toubro, Steel Authority of India and ONCG witnessed formation of short positions, while State Bank of India, ICICI Bank and Satyam Computer saw long rollovers.
The new January series saw spike in volumes, accounting for 15-20 per cent of total trades around 30 minutes before the close of the session in Nifty and several other key index futures. The Nifty January series witnessed a spike of 52,157 trades, accounting for 13.8 per cent of the total trading volumes at index level of 2,936.
Similar spikes in volumes were seen in Reliance Industries, Bharti Airtel, ICICI Bank, Larsen & Toubro, Satyam Computer and SAIL. The Bloomberg data indicated that the spikes in case of Satyam, ICICI Bank and SBI were taken place through buy orders, while for others through sell orders.
Siddhartha Bhamre, derivatives and equity analyst of Angel Broking, indicated that the spike in volumes was largely on account of index management by some traders. He expected the Nifty to get support at 2,900 and hence there was no point in going short at the current levels.
Since the market has reacted largely on account of profit-booking by bull operators, Bhamre hoped the Nifty might bounce back to 3,100-3,150 levels in the near future.
