Nifty may settle around 4900 on expiry day
The Nifty tested the 4,900 levels as indicated in our F&O outlook on Tuesday and closed below support level on profit booking in interest rate sensitive sectors like auto, banking and realty.
However, trading volumes on the F&O segment suggest that the participants were not willing to unwind their long positions below the 4,900 levels though the Nifty closed at 4,853. Also, the open interest positions in the Nifty put and call options suggest that the index is likely to settle around 4,850-4900 levels on Thursday, the last day of expiry of the current month series.
The Instanex FIIs index of top 20 most held stocks in their portfolio suggest that they were sellers in auto (Hero Honda & Maruti Suzuki), finance (Axis Bank, HDFC, HDFC Bank and ICICI Bank) and realty stocks (DLF).
The Nifty January futures which closed at discount to spot also witnessed profit booking between 4,950 and 5,000 levels and short covering when the Nifty slipped below 4,900 levels. The Nifty February futures which closed at 10 points discount to spot and added 11.75 million shares in open interest indicating rollover of short positions.
The Global markets are giving some positive cues as US Dow Jones futures was trading in the green while January futures of the SGX Nifty was trading marginally above the day?s closing level. We may see the Nifty open on a steady note but it is expected to close below the 4,900 levels as traders unwind short positions at 4,900 put.
The 4,800 put holds highest OI among put options indicating support levels for the Nifty. The resistance is seen above the 4,900 as this strike call options of the January series added 3.60 million shares in OI through sell side trades despite only a day left for the expiry.
Technically, the Nifty is trading below the 50DMA and so there is a possibility that it may touch the 200DMA level of 4,600. The trading volume in the Nifty February series put options indicates that the Nifty may move down around the 4,600 levels.