Nifty may touch 2,800 today

F&O OUTLOOK

Afantastic recovery in Monday’s afternoon session continued on the first day of Samvat 2065, with both the benchmark indices gaining over 6 per cent each on short-covering. Technically, the gap-down opening on Monday and a sharp recovery on Tuesday were a classic case of a bullish ‘Key Reversal Day’.

According to a technical analyst at JM Financial, on such days, the market makes a gap-down opening and keeps falling vertically in the first half, giving market participants the feeling that the “world would come to an end”.

Tuesday’s rebound was in line with global cues and we may see a further rebound or a gap-up opening when markets open tomorrow for full-day trading, says Siddhartha Bhamre, a derivatives and equity analyst at Angel Broking.

The markets on Tuesday could have gone up substantially had the major participants, the FIIs and domestic institutions, taken part in Tuesday’s trading, says Bhamre. After the gap-up opening, the Nifty and the Sensex remained static in the absence of short-covering, he adds.

There is a possibility of the Nifty moving up to the 2,800 level tomorrow as we may see short-covering in the Nifty futures and the key Sensex heavyweights like Reliance Industries, ICICI Bank and State Bank of India. The F&O players, who hold short positions created at around 2,800-3,000 levels, are expected to cover their short positions tomorrow, says a derivatives analyst. However, we should not be gung-ho about the last two days’ recovery as this bounce-back has come on account of positive global cues.

Technically, a 15-year long trendline support was tested on Monday and hence we may see a sharp recovery in the Sensex to 9,500 and in the Nifty to the 2,900 level. The open interest (OI) in Nifty call and put options suggests that the index has resistance at 3,000 and support at 2,400.