Firm trend likely to continue

The Nifty closed the first day of the April series on a buoyant note, ignoring all market indicators which were trading in the overbought zone. Momentum indicators continue to show caution, for example the 14-day Relative Strength Index (RSI) is at 73. Support at these levels will be crucial for the uptrend to continue. The index may find resistance around 3,150 as it has reversed from this level recently.

The Nifty put-call ratio (PCR) for the April series is at 1.92, which is comparatively higher than in the recent past. High PCR means that the options traders are expecting the markets to remain firm. These traders are expecting the index to go up to 3,250. They were seen buying the 3,200 call option by paying an average premium of Rs 92 per share. The 3,200 call option added an open interest (OI) of 708,800 shares on Friday and its OI of 2.07 million shares is the third highest among call options.

FIIs were net buyers in index futures on Friday, indicating that they have build-up fresh long positions. However, their OI declined by 5,100 contracts compared to Thursday, indicating that they have unwound their short positions.

Traders have build-up fresh long positions of 1-5 million shares each in 15 stocks futures, including all four companies of the Reliance-Anil Dhirubhai Ambani Group. As many as 65 stock futures witnessed long build-up of over 100,000 shares each. A significant short-covering of over 100,000 shares was seen in TCS, Unitech, Hindalco and India Cements.