Nifty may face resistance above 2700

F&O OUTLOOK

The benchmark indices opened on a positive note, traded in the green till the last hour of the trading session, but wiped out all the day’s gains due to selling pressure in frontline, capital goods and banking stocks. Both indices closed in the red but marginally above their support levels. The Sensex closed at 8774 as against the support level of 8700, while the Nifty closed at 2635 as against its support level of 2620.

Among the index stocks, Grasim Industries, Larsen & Toubro, Reliance Infrastructure, HDFC, ICICI Bank, Satyam Computer Services and Bharat Heavy Electricals closed with a loss of 3-4 per cent. However, ITC, Ranbaxy Laboratories, Mahindra & Mahindra, Maruti Suzuki India and DLF closed with marginal gains.

In the F&O segment, the Nifty November futures closed with a discount of 8 points while the December futures closed with a discount of 13 points to spot. The November futures added an open interest of 4.26 million shares intra-day, but only 150,900 shares were carried forward for the next day on account of the nearing expiry date. The December futures added open interest of 892,050 shares on account of short rollovers.

The put writers were seen covering their shorts at the 2800-3000 strike puts on expectation that the short-term pullback in the index above the immediate resistance level of 2800 unachievable. Nevertheless, options traders were seen writing 2700-2800 strike calls and buying 2500-2700 strike puts. This indicates that options traders expect the index to face stiff resistance above the 2700 levels and it could move below the 2500 levels.

Ashish Shroff, technical analyst of Ambit Capital, expects the index to get support at 2580, which is 66.8 per cent retracement of the rise from 2252 to 3240. This is the last support level for bulls to strike back as breaching this level would diminish the possibility of an upside.