Nifty may see profit-booking above 2,800

F&O OUTLOOK

The Nifty closed above 2,800, up 19 points on recovery in China’s manufacturing sector and a surprise growth in US home sales. However, the Nifty February futures continued to trade at a discount to spot and the cost of carry of most of the heavyweights was negative, indicating that F&O players were holding their short positions.

The February Futures traded at 15-18 points discount to spot for the first half of the session but expanded to around 20-23 points in the second half.

The options traders wrote 2,800, 2,900 and 3,000 strike calls, indicating that the index may face profit-booking above 2,800, thereby hindering its march towards 2,900 levels.

However, the traders were seen buying 2,700 calls and unwinding their short positions at 2,700 puts, indicating that the index has built up a strong support base at this level. Analyst Ashish Shroff of Ambit Capital expects the market to be range-bound and the Nifty may face resistance at 2,880 and support at 2,700 levels.