Nifty support seen at 3,000

F&O OUTLOOK

The market surprised everyone with a sharp rebound today, even as investors and speculators were expecting the indices to fall further after yesterday’s decline.

The Nifty had support at 2,920 and closed comfortably above the 3,000-mark at 3,060 on short-covering in index heavyweights like Reliance Industries (RIL), ICICI Bank, State Bank of India (SBI), DLF, NTPC and Bhel.

Nifty futures closed the day with a hefty premium to the spot index as bear operators rushed to cover their short positions above the 3,000-level. The Bloomberg data show that 58 per cent of the total volumes in Nifty December futures changed hands at an average of 3,020 when the market was rising between 11.16 am and 2.43 pm.

No wonder, the December series closed with a premium of 16 points and shed an open interest (OI) of 3.25 million shares, while January futures closed with a premium of 30 points and added an OI of 4.11 million shares, indicating short-covering and rolling over of long positions.

The rise in indices today surprised many analysts, who now expect the Nifty to face resistance at 3,135-3,160.

Jitendra Panda, senior vice-president, Motilal Oswal Securities, expects the firm trend to continue as traders, retail and institutional, may cover their short positions during the next four trading days of the December series.

He expects the Nifty to trade between 3,150 and 3,200 in coming days as a few investors have taken long positions on account of stimulus packages of governments across the globe to strengthen the economy.

Options traders were seen unwinding their short positions in 2,900 and 3,000 calls and building fresh long positions in 3,100 and 3,200 calls.

This indicates that options traders expect strong support for the Nifty at 3,000, which could move up to 3,200 before the December series expiry.

Interestingly, the 3,000 put added an OI of 1.19 million shares and the 3,100 put added an OI of 0.84 million shares, indicating that the 3,000-level, which was the resistance for the market, may be the support for the time being.