The Nifty bounced back to close around 5,100 on short-covering by big traders. The recovery is expected to continue tomorrow and we may see a bounce-back around 5,160. Intra-day trading in Nifty futures indicated unwinding of long positions in the early session and significant short-covering when the index moved above 5,050. The Nifty May futures added 1.01 million shares in open interest, mostly through buy trades around 5,050-5,100, indicating long build-up.
However, the trading pattern in Nifty puts suggests the recovery may not be sustained above 5,200. The participants unwound short positions in 5,200 and 5,300 puts as they saw limited scope for a turnaround in the near future. However, there was significant long build-up in the 5,300-strike call options, probably to cover short positions in the futures segment. The 5,200-call saw unwinding of long positions in the morning and short-covering in the afternoon. The support for the Nifty based on build-up in open interest in put options has been around 5,000 while there is resistance above 5,30 0.
Among stocks futures, State Bank of India (SBI) closed above Rs 2,300 on expected long build-up from institutional traders. The time-price opportunity (TPO) chart using volume indicates SBI has the potential to go around Rs 2,370 in the near future. Cipla moved up strongly on long build-up by big traders. The stock closed above value areas as 35 per cent volume changed hands above Rs 340. The TPO chart suggests Cipla can face strong resistance around Rs 355.
Ashok Leyland continued to move in the bull orbit on long build-up. The May futures added 3.90 million shares in open interest through buy trades from institutional players. The stock can move around Rs 70 from the current close of Rs 65, TPO data suggest.
