The Nifty recovered sharply from the support level of 2,650 to close the day at 2,752 due to short-covering in Nifty and stock futures ahead of expiry of the November series. The short-covering was prominently seen in Nifty futures and key stock futures such as Reliance Industries, ICICI Bank, HDFC Bank, Sterlite Industries and Steel Authority of India.
Trading volumes in Nifty futures and key stock futures picked up during the last 90 minutes of trading on Wednesday. Bloomberg data show that most trades were initiated through buy orders, indicating short-covering. Similarly key stock futures also saw 35-45 per cent volumes in the last 90 minutes of trading, mostly through buy deals.
Kamlesh Langote of vfmdirect.com said the Nifty's holding support of 2,640 in Wednesday’s session has arrested a further downside up to the 2,500-level. Since markets are now trading sideways, there should be another downside pending for one or two days. However, the decline may not reach the 2500-level, he said. Going forward, the market is likely to be volatile and is expected to move between 2,500 and 2,800 for some time.
Options traders expect the Nifty to settle between 2,700 and 2,800 tomorrow as we saw some buying in the 2,700 strike call options and writing in 2,700 strike put options. The put buyers were seen booking profits at the 2,800 put, while call writers were seen covering their short positions at the 2,800 call. This means some traders expect the Nifty to settle above the 2,800-level.
A day before expiry of the current month series, Nifty futures witnessed 22.92 million shares getting rolled into the December series. These rollovers have been lower than those of 29.13 million shares seen on the penultimate day of the previous expiries.
