Strong resistance above 4,400 levels

Trading action shifted to small and mid-cap stocks. Hence, as expected, the Nifty closed below 4,300 levels at 4,270. It is difficult to predict the index movement from the current level as the overall trend is up. The Nifty June futures closed at 4,299, 30 points premium to the spot, which suggests rollover of long positions. However, there appears strong resistance above 4,400 levels while support is seen at 4,150-4,200 levels.

Derivative analysts indicate that the intra-day decline is largely on account of profit booking in index heavyweights. Also, an intra-day dip could be a part of consolidation as major technical indicators are back in the buy mode. If the Nifty crosses and closes above its first hurdle of 4,450, then the next major resistance is at 4,650. The Nifty May futures made an intra-day high of 4,620 while SGX-Nifty had quoted at 4,660 on Tuesday, indicating that the Nifty can go up to the 4,600 level, may be in the new June series.

Reliance Industries and banking stocks pulled the Sensex lower today after last two days of gains. The Nifty May futures closed at 20 points premium to spot and shed open interest (OI) of 1.15 million shares, indicating unwinding of short positions by bears. The Bloomberg data suggest that the Nifty had strong support at 4,270-4,300 levels while profit booking was seen when the index was trading above 4,3,50 levels.

Reliance Industries (RIL) fell 3.50 per cent on profit booking in the cash segment and unwinding of long positions in the derivative segment. The May futures of Reliance Industries closed at a premium to the spot and added OI of 219,900 shares, indicating long build-up at the lower level.