Nifty expected to target 5,400 level on Monday

F&O OUTLOOK

The Nifty moved in a narrow range and closed on a positive note on institutional buying in index futures and key stocks futures. The trading volume in Nifty April futures was subdued, down almost 40 per cent from Wednesday’s level, indicating lack of interest at current levels.

The April futures continue to trade at a premium to the spot, but with low volume, indicating long build-up. The Nifty may consolidate further and is expected to target the 5,400 level when it opens on Monday. The time-price opportunity (TPO) chart indicates the index may get strong support at 5,270.

The trading volume in Nifty futures and options in the last couple of days indicates long build-up by institutions and profit-booking by retail participants at higher levels.

For example, the April futures on Thursday saw sell trades above 5,295, but Bloomberg data indicate buy trades for contracts above 25,000 shares. The April futures, despite 53 per cent volume, changed hands above 5,295 and added 430,200 shares in open interest, indicating larger participation from institutional players.

Call and put options data indicate that bulls have complete control over the market, indicated by the trading volume in in-the-money and at-the-money calls. The volume in 5,200-5,300 calls was subdued as traders covered only short positions in these. The 5,400 call saw significant build-up of open interest through buy trades as participants expected a bull rally ahead. Strong support is seen at 5,200 based on open interest build-up in the 5,200-strike put options.

Among stocks futures, Reliance Industries, Infosys Technologies, HDFC, TCS and State Bank of India saw long build-up by institutional traders. The TPO target for Reliance is around Rs 1,114 while Infosys has the potential to move around Rs 2,715 in the near future. HDFC saw strong volumes above Rs 2,780, mostly through buy trades. The TPO data suggest that HDFC can move up around Rs 2,835 level in the near future.