The Nifty opened gap-down, around 5,200 levels, recovered to the day’s high of 5,260 and closed near the opening level on profit-booking during the mid-afternoon session. The futures and options (F&O) participants, led by institutions, booked profit on fear the Reserve Bank of India (RBI) would further raise rates after a surprise increase late last week.
The European markets opened on a weak note, down by over 1 per cent, on lack of interest at current levels. The F&O participants, however, expect limited downside for the Nifty from the current levels as March and April futures closed at a premium to the spot, indicting holding of long positions.
Nifty March futures shed 3.67 million shares in open interest, mostly in the form of rollovers in April futures. The April futures added 4.10 million shares in open interest through buy-side trades, taking the total open interest to 11.03 million shares. This means participants are rolling over long positions on expectation of a fresh rally.
The RBI’s announcement of an increase in repo and reverse repo rates by 25 basis points had a negative impact on in-the-money and at-the-money calls as participants booked profit due to uncertainty at current levels. Long build-up was seen in 5,200-5,400-strikes call of the April series as participants expected the Nifty to bounce back from the current levels in the April series.
The 5,100 put saw buy-side trades, mostly for hedging long positions in the Nifty futures. The 5,200 and 5,300 puts together shed 606,000 shares in open interest through sell-side trades, indicating profit-booking. The support for the Nifty in the next month’s series is around 5,000-5,200, based on build-up in open interest in the 5,000-5,200 strikes put of the April series.
As expected, Bharti Airtel remained strong on long build-up. The price projection based on the time-price opportunity chart indicates the stock may move around Rs 326 in the near future.
