Profit-booking by traders wiped out the morning gains and sent the benchmark indices into the red on Wednesday. The Nifty closed below the 3,000-mark from the day’s high of 3,240, while the Nifty November futures ended at a discount to the spot market after hitting the day’s high of 3,299. It was indicated that the Nifty has stiff resistance above 3,200. However, the index could move up to 3,300.
Technical analysts expect the index to continue drifting lower till the 10-DMA (daily moving average), which is at 2,850. In the short term, a technical analyst at Ambit Capital expects the index to trade in a range of 2,800 to 3,200 and this consolidation will help the market for the next big movement on either side of the range. The short-term rally has ended with a reversal at the 3,100-level.
F&O traders triggered profit-booking early in the day as the Bloomberg data showed that 18 per cent of volumes in the Nifty November futures changed hands in the first hour of trading with the index hovering around an average of 3,190.
The selling in Nifty futures continued thereafter and logged the remaining 80 per cent of volumes at around 3,065. The Nifty November futures closed at a 20-point discount to the spot market, while the open interest (OI) increased by 3.20 million shares, indicating a creation of short positions.
