Nifty bottom likely around 2900

F&O OUTLOOK

Both the benchmark indices fell to a new low today with the BSE Sensex closing at 9975 and the Nifty at 3074. As per the F&O data, the Sensex and the Nifty had support at 10018 and 3100, respectively. Both declined sharply from their resistance levels of 10750 and 3350, after opening on a positive note.

In the 2000-01 bear market, the Sensex declined by 56 per cent from its peak of February 8, 2000. The bottom for the Sensex in the current bear run would be around 9328, which is 56 per cent retracement from its peak of 21200 on January 8 this year.

Kamalesh Langote, technical analyst of vfmdirect.com, expects the Nifty to bottom out at around the 2900 levels. The market is expected to be volatile next week and the Nifty could trade between 2900 and 3300. Siddhartha Bhamre, derivatives and equity analyst of Angel Broking, expects the Nifty to get strong resistance above the 3,300 levels as the traders book profits above this level.

The Nifty support of 3100 was breached today and hence it is difficult to predict its bottom, say derivative analysts. The 3100 put witnessed a negligible increase in open interest despite a trading volume of Rs 2,550 crore. This means put sellers have covered their short positions at 3100 strike in anticipation of a further decline in the index next week.

The Nifty October futures contracts closed with a discount to spot while open interest increased marginally by two lakh shares. However, the order book position at the end of the day showed open interest of 3.13 million shares. This indicates that the F&O players have settled their intra-day positions after the trading hours.

Is it the time for investor’s to act on Warren Buffett’s investment principle – Be fearful when others are greedy and feel greedy when others are fearful.