Nifty may see resistance at 4950 levels
With presentation of Union Budget, intra-day volatility may increase significantly. A move above 4885 is likely to take Nifty to 4950 level.
By ET Bureau |
In the past three trading sessions, Nifty has been moving in a narrow band of 4830 and 4885. The trading volumes have been low and the historical volatility of the index has fallen gradually.
Today the Union Budget will be presented and it is likely to increase the intra-day volatility significantly. A move above 4885 is likely to take Nifty to 4950 level while on the downside a breach of 4830 may take it lower to 4780. A move above 4955 will open the gates for higher levels of 5030 and then 5150 in the medium term.
There was some short-covering towards the end in yesterday’s session and Nifty futures closed at a premium of 4 points after maintaining a discount of 5-8 points in the past couple of days.
Steel Authority of India (SAIL), Tata Power and Maruti Suzuki were some of the stocks where short-covering took place. On the other hand, short build-ups were seen in Reliance Industries and JP Associates Nifty put-call ratio (open interest) for March series stands at a high 1.26 and put options of 4800 have a build-up of 81198 lots.
Strike 5100 has the maximum open interest for call options at 75015 lots, indicating that strong supply is likely to emerge in the 5100-5150 zone. On the downside, a breach below the recent low of 4675 (break-even level for put option writers of strike 4800 which is currently trading at Rs 125) may lead to a sharp fall in the market.
Sectoral moves are likely after the Budget is announced and we expect steel stocks like SAIL, Jindal Steel & Power and Tata Steel to outperform the market in the short term. We recommend initiating a long position in SAIL March Futures at Rs 210-212 level with a target of Rs 230 and a stop-loss of Rs 197.
Vinit Pagaria, AVP-Investment Strategies, Microsec Capital Research
Today the Union Budget will be presented and it is likely to increase the intra-day volatility significantly. A move above 4885 is likely to take Nifty to 4950 level while on the downside a breach of 4830 may take it lower to 4780. A move above 4955 will open the gates for higher levels of 5030 and then 5150 in the medium term.
There was some short-covering towards the end in yesterday’s session and Nifty futures closed at a premium of 4 points after maintaining a discount of 5-8 points in the past couple of days.
Steel Authority of India (SAIL), Tata Power and Maruti Suzuki were some of the stocks where short-covering took place. On the other hand, short build-ups were seen in Reliance Industries and JP Associates Nifty put-call ratio (open interest) for March series stands at a high 1.26 and put options of 4800 have a build-up of 81198 lots.
Strike 5100 has the maximum open interest for call options at 75015 lots, indicating that strong supply is likely to emerge in the 5100-5150 zone. On the downside, a breach below the recent low of 4675 (break-even level for put option writers of strike 4800 which is currently trading at Rs 125) may lead to a sharp fall in the market.
Sectoral moves are likely after the Budget is announced and we expect steel stocks like SAIL, Jindal Steel & Power and Tata Steel to outperform the market in the short term. We recommend initiating a long position in SAIL March Futures at Rs 210-212 level with a target of Rs 230 and a stop-loss of Rs 197.
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Vinit Pagaria, AVP-Investment Strategies, Microsec Capital Research
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