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We have seen the Nifty oscillating between 5400 and 5450 from the past three trading sessions with Nifty Futures' discount deepening to almost 10 points on Thursday.
However, we saw some short-covering in the last 30 minutes of trading, taking the basis to a premium of 8 points at market close, with Nifty Futures closing at 5,434. The shorts, built into the system after the 50-bp rate hike, are very much intact, especially in Bank Nifty Futures where opening interest is still around 18 lakh units. Among options, we observed heavy 'call' writing at 5400 strike which added 45 lakh units in its open interest in the past three trading sessions, making us believe that the Nifty will remain under pressure in days to come. We, however, believe that positional traders should expect the Nifty to take support at 5350, which, if breached, will fade hopes of recovery.
However, we saw some short-covering in the last 30 minutes of trading, taking the basis to a premium of 8 points at market close, with Nifty Futures closing at 5,434. The shorts, built into the system after the 50-bp rate hike, are very much intact, especially in Bank Nifty Futures where opening interest is still around 18 lakh units. Among options, we observed heavy 'call' writing at 5400 strike which added 45 lakh units in its open interest in the past three trading sessions, making us believe that the Nifty will remain under pressure in days to come. We, however, believe that positional traders should expect the Nifty to take support at 5350, which, if breached, will fade hopes of recovery.
The highest concentration of 'puts' remains at 5400 strike, where 'put' writers are still holding ground. On the upside, we recommend a fresh buying only after the Nifty crosses 5480 as we have seen strong resistance at 5450 in the past few trading sessions.
Month-to-date, FII activity is also not very encouraging as FIIs have been net sellers worth over 4,900 crore in the cash segment and have sold index futures worth over 3,900 crore.
US stock indices closed higher on Wednesday, snapping a 3-day losing streak as commodity prices rebounded, with the Fed giving no indication about tightening the monetary policy anytime soon in its minutes. Back home, eyes are now on corporate earnings of Tata Motors , Tata Steel , BHEL and GAIL, scheduled for the next week.
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