Volatile activity seen around 2850-3250 range

With foreign players buying in spot and index futures along with huge call buying in 3100-3200 strikes and put writing at 3100-3000 strikes, Indian markets may gain further in the coming week. However, markets have now turned over-bought and higher levels may attract players to book profits in their long positions. “Levels of 3200-3250 may prove to be a big uncertain ‘block’ on an upside. Capped upside’ is likely in the next week. Institutional activity and Global news-flow is likely to swing the markets in the coming week. On the whole, ‘ranged and volatile activity’ is seen in the range 2850-3250 of Nifty,” said Reliance Money in a report. The sharp pull-back rally gained strength last week and was largely due to upbeat cues from the global markets which pushed players to cover their shorts ahead of the F&O expiry. The rally has been so sharp that the index crossed quite a few hurdles with ease. Indices have now closed above significant levels of 10,000 (Sensex) and 3100 (Nifty). Activity was on the whole wide-spread and was visible in mid-cap and small-cap segment too. Surprisingly the volumes too were elevating and were supportive for the broad based rally last week suggesting buoyant sentiments among the market players. “At present, the momentum is undoubtedly favoring the bulls. However, with the markets turning into the overbought zone, chances of profit-taking in the near term are relatively high. The deepness of the correction, if any, will be very significant as it will reveal the market direction. Any breach below the 2850-2800 level may call for heavy selling in near term,” said Amit Sharma, Prituous Wealth Advisory. Last week was an ‘expiry week’ in F&O. It started on very ‘firm’ note with Nifty witnessing a solid positive opening and then surging further ahead without much ‘profit-taking’. Markets mirrored ‘rally’ in global peers and advanced on four out of five trading sessions in the week. Expiry for March series was unexpected. Closing of the series witnessed markets surging sharply on account of ‘short-squeeze’. ‘Positive’ action from FIIs kept the sentiment buoyant in the last week. On weekly basis, Nifty (spot) closed 10.74% higher at 3108.65. Nifty March Futures closed the series at 3082.70 and Nifty April futures too, posted decent gains of 329 points and closed 11.77% higher at 3124.55. Nifty April futures moved into Premium of 16 points. Volumes in F&O were sharply lower on Friday, with total turnover falling to Rs.51171 crore as against Rs.76957 crore in previous trading session. Top gainers in the F&O were Aban Offshore, JSW Steel, Tata Motors, Orchid and Sesa Goa. Top losers were Tulip, HDFC, Infosys Technologies and Biocon. The technical note of Reliance Money said, “On daily chart Nifty (after closing above 2850 levels) is now trading very close to its acid-test range of 3200-3250 on daily charts. On a positive side volumes, market breadth and FII flow has remained very strong through the week. Also observed was average cross-over (20&50 day EMA) on last session of the week around 2830 levels. Thus, in case current rally is sustained with 2800-2850 as short term support we may see extension of rally towards 3250 first and then towards 3500 (200 day SMA & 50 week EMA) on higher side.”