The Nifty closed above the 4,730 levels after a brief correction during the morning session on Friday on short covering in index heavyweights. Foreign institutional investors (FIIs) were seen active on oil and gas giant Reliance Industries, telecom giant Bharti Airtel, private sector bank ICICI Bank and personal care giant Hindustan Unilever counters. These stocks outperformed the benchmark indices and witnessed short covering in the futures & options segment.
The rally is expected to continue next week with strong support seen around 4,600-4,700. The Nifty is expected to target the 4,850 level next week and would face strong resistance above the 4,900 level. Fresh upside is expected on the basis of trading in call options. Traders expect the rally to continue till the above mention target is achieved.
The Nifty September futures continue to trade at a premium and added a fresh open interest of 1.30 million shares through long build up. Though the Nifty dipped to an intraday low of 4,650, the average trade in the September futures was done at the 4,702 level, indicating no panic selling by bulls. Also, an open interest of 24.3 million shares on the first day of the new series has been biggest in the last three months, and mostly through buy-side trades.
A strong undercurrent is also seen in several Nifty stocks that have build up long positions and witnessed short covering, but were not rewarded through the price rise. The Nifty stocks with high open interest compared to a month-ago level are Bharti Airtel, BPCL, Cipla and Wipro. Short covering was seen in Jindal Steel, Reliance Industries and State Bank of India. These stocks are expected to move up further and will take the Nifty to the 4,850 level.
