The Nifty moved in a narrow range and closed in a Doji pattern, indicating indecisiveness at current levels. Investors across the world remained indecisive, with European stocks moving in the narrow range and likely to close in a Doji pattern ahead of key meetings of the Bank of England and the European Central Bank on interest rates. Both are widely expected to keep rates at record lows.
Traders booked profit on account of fears over rise in interest rates due to high food inflation, said analysts at broking houses.
Nifty March futures closed in a Doji pattern as traders shed more than 2.50 million shares in open interest from intra-day levels, indicating profit-booking. The bears seem to be waiting for their turn to go short. However, the range-bound trading is not allowing them to do so.
Foreign institutional investors seem to be bullish and have covered short positions in index futures.
The Nifty is expected to move in a narrow range in the absence of fresh short or long build-up in index futures as well as key stocks futures. Traders, however, bought the 5,000-strike put options and the 5,100-strike call options on expectation of an increase in volatility in the near future. There was profit-booking in the 5,000-strike call while 5,100-5,200 calls together added 1.1 million shares in open interest, mostly through buy-side trades.
Strong support is expected around 5,000 based on open interest build-up in 5,000-strike put options. The resistance is expected above 5,100, as this call holds the highest open interest among call options. The 5,100 put saw an increase in open interest through sell-side trades as a few futures and options participants expected that the Nifty might show strength after closing above 5,100.
