Easing concerns about the monsoon had an impact on the market On Tuesday as benchmark indices rebounded despite mixed cues from overseas. “On Tuesday’s recovery was mainly due to technical short- covering. Markets could consolidate around this level for the time being,”
“There cannot be any reversal of trends until the Nifty crosses the 4,500-level. On Tuesday it was unable to do so. Further, there are no triggers for a reversal right now,”
The 4,500 level, which acted as indicative support for the market in the last two weeks, is expected to face major resistance levels going forward. The 4,500 puts witnessed short covering of 1.02 million shares, mostly from put writers.
Nifty has support around 4,300-4,400 in the near future. The Nifty On Tuesday staged a bounce-back from its technical support level of 4,375 to close at 4,459 on short-covering and renewed buying in shares of auto, capital goods, realty and power companies.
Technically, we may see a fresh bounce-back as both the indices, Sensex and Nifty, have not fallen into a bearish pattern as they have not broken their recent lows. The Nifty has maintained its trend- reversal level of 4,360 and now has support at the 4,400. It may even breach the 4,500-level tomorrow.
Options traders were seen covering their short positions in almost all strike call options, indicating a fresh bounce-back from the current level. The 4,400, 4,600 and 4,700 strike calls lost an OI of over 200,000 shares each, and the Bloomberg data suggested that the decline was largely due to buy side deals. The 4,300 and 4,400 strike puts continued to add fresh OI, indicating a strong support zone for the Nifty.
Investors can be bullish above 4,700 and likewise be bearish below 4,350 on closing basis.
Avoid large positions and trade lightly till the indices break out of the current trading range.
MARKETS WILL BE RANGE BOUND TRADE AND ASIAN PEERS ARE TRADING FLAT TO
POSITIVE. OUR MARKETS WILL BE FLAT TODAY.
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