The Nifty moved out of the resistance zone on Friday (5,250-5,270) and closed at 5,282 on long build-up in index and stocks futures. Now, 5,310 is the next target which is likely to be achieved on Monday. Technically, the index is trading above the hourly and daily averages with a positive weekly and hourly momentum, a good sign for bulls. The index continues to trade in an upward parallel channel and the target above 5,310 is 5470, which is the upper trendline of the channel.
The Nifty April futures achieved the 5,310 level intraday and closed at 5,297 on profit-booking by retail traders. As indicted in this column earlier, the Nifty is likely revisit its new high around the expiry of the March series. The Bloomberg data show bulk buying in the April futures above the 5,300 level by institutional players, which is a good sign for bulls. The April futures added 1.60 million shares in open interest (OI) through buy-side trades, indicating long build-up. Traders expect the current rally to continue further, as the Nifty May and June futures closed above the 5,300 level and added 258,500 shares in OI despite a trading volume of 5,17,100 shares.
The options traders seem to have covered short position at 4,900-5,200 strike calls, as these calls shed OI mostly through buy-side trades. The 5,300 call option witnessed a mixed pattern and added 0.59 million shares in OI, indicating build-up of short and long positions. The 5,400 call added 1.25 million shares in OI through buy-side trades, indicating hedging of short positions by bears.
Among stocks futures, participants have build-up long positions in Reliance Industries, ICICI Bank and HDFC Bank with profit-booking in Infosys Technologies, TCS and Wipro. The Instanex FII Index continues to show strong uptrend, which indicates sustained optimism as the index easily outperformed the Nifty and the Sensex last week. According to Gautam Chand, CEO, Instanex Capital, FIIs will take markets higher over the next few weeks. He expects over 25 per cent equity market returns over the next 12 months.
