Nifty may touch 4,850 next week

The Nifty is poised to break the 4,730-level in a day or two and target the 4,850-level some time next week. All the indicators of futures and options (F&O) point at a sustainable rally of up to 150 points in the September series with support continuing to be between 4,600 and 4,700. This expectation is also based on technical factors as the Nifty has closed the last three sessions in an inverted hammer pattern, suggesting a pause before a forward march.

Siddhartha Bhamre, derivatives and equity analyst at Angel Broking, expects the Nifty to move higher as no meaningful open interest (OI) has been built up around the 4,700 and 4,800 strike calls. Traders are writing the 4,900 and 5,000 strike calls of the September series as they expect the index to face a strong resistance above the 4,900-level. So, they feel, it is a safer bet to write deep out-of-the-money calls.

Cement and banking stocks today witnessed rollover of short positions and hence they were expected to be weak, said Bhamre.

The rollover in the Nifty September futures was higher at 23.05 million shares, compared to 22.70 million shares rolled over in the August futures last month. While traders last month allowed an OI of 10.33 million shares of the July series to expire, the expiry in the August series was lower at 7.27 million shares. This means traders expect the Nifty to breach the current resistance level of 4,730 and move up to 4,850.

Rollovers in key index heavyweights were considerably higher in terms of volume and percentage, indicating long rollovers. Reliance Industries witnessed a rollover of 1.25 million shares, or 73 per cent, compared to 65 per cent in the corresponding period last month. Rollovers in pharmaceutical stocks such as Cipla, Orchid Chemicals and Ranbaxy Labs were higher than expired positions, indicating long rollovers.