Nifty may not rise significantly from here on

The Nifty closed in a Doji pattern after hitting a new 52-week high, indicating resistance at higher levels. Nifty July futures closed at two points discount to the spot and added 603,300 shares in open interest, indicating build-up of short positions at higher levels. The market picture chart indicates strong resistance around 5,400, according to the time-price opportunity (TPO) data, while volume traders expect the index to get strong supply around 5,408.

The trading pattern in Nifty futures and options indicates the market may not move up significantly from the current level. Trading in July futures was restricted in the range of 5,365-5,385 on lack of interest at the higher level.

Though top traders covered short positions above 5,385, the Nifty could not sustain above this due to profit-booking by retail investors.

Options traders covered short positions in 5,200-5,300-strike calls while change of hands was seen in the 5,400-strike call. The 5,500-strike call options saw buy trades, indicating hedging of short positions. The 5,300- and 5,400-strike puts together added two million shares in open interest through sell trades, which indicates the Nifty might get support at 5,300 and see resistance above 5,400.

Earnings expectation is driving the markets higher, say market analysts. Infosys Technologies, which will be the first among blue-chips to announce first-quarter earnings tomorrow, is expected to report healthy numbers. The July futures of Infosys saw short-covering and fresh long build-up in anticipation of revised guidance for the FY11. The July futures closed at 2887.50 after hitting a new high of 2,909.80 on profit-booking. TPO and volume data indicate limited upside for Infosys.

Among stock futures, ICICI Bank saw long build-up of around one million shares at 876-883 by top traders. However, the price projection using TPO charts and volume indicate the July futures of ICICI could move up to only around Rs 890. HDFC Bank, however, showed strong momentum, up 2.28 per cent on long build-up of 584,250 shares. The TPO data show a price target of 2,080 from Monday’s close of 2,047.