F&O Outlook: Nifty may trade in a range

The Nifty ended on Tuesday above the support level of 3980 after testing 3900. Technical analysts expect a downturn if the Nifty closes below 3980 and an uptrend on a close above 4100.

Reliance Industries (RIL), however, looks technically weak. It has underperformed the indices in the last seven days, falling by 9.2 per cent compared to the Nifty's decline of 3.6 per cent. No wonder, RIL has witnessed short build-up of 2.10 million shares since the beginning of the July series on June 27.

At the current price of Rs 1,975.55, RIL is trading marginally above its recent low of Rs 1954. This is 100 per cent retracement of its recent swing from Rs 1954 to Rs 2260.

RIL can appreciate up to Rs 2144, which is 61.8 per cent retracement of its recent fall. Else it could go down to Rs 1768, which is 161.8 per cent retracement from its recent high.

The Nifty July futures continue to trade at a discount, indicating that short positions remain intact. The Nifty July futures contracts closed at 3926.50, compared to the Nifty's close of 3988.55, which is a wide discount of 62 points.

The open interest in Nifty futures had risen by 2.8 million shares at the end of the trading session. But 1.40 million shares were carried forward, suggesting the unwinding of intra-day positions.