Nifty likely to cross 3,740-mark soon

The Nifty is likely to cross the 3,740-mark in a day or two as futures & options (F&O) traders were seen covering their shorts in index and stock futures today. The fresh rally will be led by metal stocks and key index stocks such as Reliance Industries (RIL) and State Bank of India (SBI). The resistance, however, continues to be at around 3,800, while a strong support remains at 3,600.

Short-covering was evident in the Nifty May futures, which shed an open interest (OI) of 888,650 shares despite a trading volume of 32.37 million shares. The Bloomberg data suggested that traders covered their short positions at higher levels as over 50 per cent buy trades changed hands at an average index level of 3,675. The futures closed on a par with the spot index, indicating no fresh short build-up.

Among the key stock futures, short-covering was seen in Bharti Airtel, ONGC, RIL, RCom, SBI and Bhel. However, the traders also built up long positions in Hindalco, SAIL, JSW Steel and Tata Steel.

RIL closed above Rs 1,900 and now heading towards Rs 2,000. The May futures of RIL closed at Rs 1,917.45 and shed an OI of 261,300 shares, indicating covering of short positions.