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| Fresh rally on cards |
| B G Shirsat / Mumbai Jun 07, 2009, 00:02 IST |
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As expected, the Nifty faced resistance around the 4,650 levels and closed at 4,586 on profit-booking on Friday. The Sensex closed at 15,100 after touching an intraday high of 15,257. Both the benchmark indices have closed above their resistance levels. Thus, we may see a fresh rally next week with the Sensex moving up to 15,600.
Though foreign institutional investors (FIIs) sold heavily in index and stock futures in the last two days, there was only a marginal increase in open interest (OI) in both the segments. This means FIIs have booked profit at intraday highs, but have not created fresh short positions, at least in index futures.
The OI build-up in key stock futures indicate that FIIs have created short positions, mostly in Reliance Industries, ICICI Bank, State Bank of India and Tata Steel. Profit-booking was seen in JP Associates, Unitech, ITC and DLF. The long build-up was seen in Larsen & Toubro, Bhel, Grasim and Hero Honda.
Trading action in the last couple of days tells us that bears are attempting a comeback or are unwinding short positions at lower levels. This is evident from trading in the Nifty June futures, which continued to trade at a premium. It has an OI of around 29 million shares. This means their long positions are intact with no short build-up.
The technical set up remains deeply overbought, indicating limited upside from current levels. The only positive is the way the US and other Asian markets are placed, still away from their uptrend targets. The Nifty has resistance at 4,650, with stop-loss at 4,450.
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