The BSE Sensex and the S&P CNX Nifty moved in a narrow range and closed in the red on concerns over another interest rate hike amid rising inflation. Sentiment was also hurt by the dispute between market and insurance regulators over governing unit-linked insurance plans.
Nifty April futures, however, closed at a premium to the spot and added nearly one million shares in open interest, indicating strong undercurrent.
However, the market picture chart, which shows the intra-day strategy of futures and options (F&O) traders, indicates resistance above 5,360. However, bulls held 5,330 levels firmly as they were unwilling to unwind below 5,330. This means we may see a quiet opening, followed by range-bound trading.
According to analysts at Edelweiss, the risk-reward equation remains favourable for trend traders till the 5,260-mark is respected. Upside resistance is expected to emerge closer to 5,450.
Foreign institutional investors (FIIs) continued to buy puts along with a long formation in index futures. This means FIIs are hedging long positions in index futures on expectation of a modest correction.
The significant unwinding in 5,00 put options and fresh build-up in 5,400 call options suggest strong resistance above 5,400. Traders built fresh shorts in the 5,300 call and unwinded short positions in the 5,200 put on expectation of a fresh correction if the Nifty does not hold 5,300 levels.
Among stock futures, ITC remained strong with fresh long build-up above Rs 271. The time-price opportunity (TPO) data indicate fresh upside around Rs 275. Tata Steel remained firm and almost 30 per cent volume changed hands above 680.
The TPO chart indicates upside around Rs 693. Reliance Industries saw narrow movement. TPO data show that Rs 1.121 is a strong support for Reliance.
