Strong global cues may see Nifty up

The Nifty closed the day today well above its support level of 4,360 on firm European markets but failed to cross the 4,500-mark on profit-booking at higher levels.

The Instanex ownership indices underperformed the benchmark indices, indicating that the rise in the Sensex and the Nifty was not driven by the large-cap stocks held by foreign investors, domestic institutions and retail investors. No wonder, index heavyweights Reliance Industries (RIL), ICICI Bank and Larsen & Toubro (L&T) underperformed the market.

The market may go up tomorrow on the back of strong global cues, but if the index heavyweights remain sideways, then we may again see profit-booking at higher levels.

According to a technical analyst at JM Financials, the market could go up further if it closes above the supply zone of 4,535-4,560.

Support for the index is seen at 4,360-4,400 levels as the 4,300 put holds the highest open interest (OI) among put options and the 4,400 call has witnessed unwinding of short positions.

Traders today stuck to the 4,500-level as this price call witnessed trading volume of 14.32 million shares (Rs 6,550 crore), mostly in the form of short-covering by call writers. In the end, the 4,500 call added an OI of 0.66 million shares at an average premium of Rs 71. This means the call writers expect the Nifty to face resistance above 4,571.

Nifty August futures today traded at a premium of 1 point as against a discount of 8.05 points on Wednesday. The August futures lost an OI of 1.96 million shares, mostly through short-covering, hinting at a fresh upside in the near future.

The September futures too closed at a premium to the spot and added an OI of 1.75 million shares, mostly through buy orders. This indicated that the traders were taking long positions, expecting a bull market in September.