The Nifty moved in a narrow range, maintained its support at 5,095, faced resistance at 5,147 and closed at 5,123, indicating indecisiveness among futures and options (F&O) participants.
The trading volume in Nifty March futures was poor, around 9 per cent below 5,102 and 22 per cent above 5,128, indicating that traders expected the Nifty to move in a narrow range. It will be important to see if the Nifty can surpass 5,147. This is because once it moves beyond this, the ambitious target of 5,310 will be achieved. Nifty March futures saw multi-directional movement before settling near 5,120.
Traders booked profit within the value area for the day (5,106-5,126), which indicated that the Nifty was unlikely to move above 5,147 in the near future.
Nifty March futures saw change of hands, as despite a trading volume of 17.62 million shares, it added 163,650 million shares in open interest. Bloomberg data show buy-side trades above 5,128 and below 5,102, indicating short-covering at higher and lower levels. Profit-booking continued in 4,900- and 5,000-strike calls as participants expected that the Nifty would move in a tight range in the near future.
The 5,000 put and call have seen a sharp increase in open interest in the last couple of trading sessions, mostly through buy and sell trades, respectively. This means that an increase in open interest in the 5,000-strike put is largely due to buying of puts to hedge portfolios. The 5,100 call, however, saw fresh open interest build-up, mostly through sell-side trades, indicating a strong resistance area for the Nifty going ahead.
Reliance Industries showed strength on short-covering and fresh long build-up. Traders covered short positions in the March futures when the stock was trading below Rs 1,000. However, the time-price opportunity chart suggests the stock may face strong resistance above Rs 1,030. State Bank of India saw short-covering at lower levels.
