Business OpportunitiesF&O Outlook: Nifty may test new high before expiry
The Nifty closed above the crucial resistance level of 5,080 on strong buying in index stocks such as Reliance Industries, ICICI Bank, Tata steel and Cipla. Bharti Airtel, Reliance Communications, Jaiprakash Associates and State Bank of India closed in the red on shorts build-up on the F&O segment. The Nifty November and December futures closed at a premium to the spot on intraday short-covering and fresh long build-up.
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According to technical analyst Bhupesh Sharma from Bikaner, the market is likely to open on a positive note, but the Nifty may face resistance at the 5,153 level.
According to analyst Gautam Shah at JM Finance, the index is expected to test the October 2009 high and even move closer to the next major resistance level of 5,270-5,300 as it has closed above the 5,100-mark. Interestingly, despite an intraday trading volume of 1.11 million shares, the 5,200 put of the November series added 380,350 shares in open interest from the sell-side trade, indicating fresh upside for the Nifty around the 5,200 level before expiry of the November series. Also, the index is likely to trade above the 5,100 level, as the 5,100 put of the November series added 449,750 shares in open interest (OI) mostly through sell-side trades.
The Nifty November futures witnessed short covering and long rollovers as it closed at a premium to the spot and shed 2.23 million shares in OI. The December futures closed at 5,117 against the spot close of 5,103 and added 2.63 million shares in OI indicating long build-up. The Bloomberg data suggest that the traders were buying the Nifty futures at every levels indicating change of hands from sellers to buyers. This, according to a derivative analyst, will take the index to new high before the expiry of the November series.
The 5,200 call option of the November series witnessed a considerably high volume of 5.80 million shares, mostly through a change of hands. In the end, the 5,200 call added 274,400 million shares in OI, which indicates fresh long build up. The strong support for the Nifty is expected to be around 5,000-4,900-4,800 levels in that order.