The benchmark stock indices continued to be volatile yesterday with a downward bias due to weak monsoons and global cues. What dampened the sentiment was Agriculture Minister Sharad Pawar’s comment that the deficit in rainfall might result in a sharp decline in rice production this year.
“Our markets have reacted in tandem with the world markets. The outlook continued to be positive as our economy is very strong,”
The Nifty maintained its support of 4,360 and closed the day today at 4,394 on profit-booking in auto, metal, oil & gas, power and realty stocks. Technical analysts indicate that there would be a substantial correction if the index closes below its support level of 4,360.
A significant build-up is visible in the 4,400 and 4,500 call options. The 4,500 call added an OI of 652,250 shares at close and the Bloomberg data suggested that there was short build-up by the bears. This means the 4,500-level would continue to be the resistance level.
The 4,400 call too added a significant OI yesterday and this level might act as resistance if the Nifty closed below 4,360.
Unwinding of short positions was seen in 4,400-4,700 puts which indicated that traders expected the Nifty to trade below 4,400 in the near future. The 4,300 put added an OI of 362,000 shares, the highest among put options. Hence the Nifty has a strong support around 4,300.
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