Nifty futures under downward pressure

The ‘snakes and ladders’ game continued in the bourses last week as well, with the Nifty future recovering a good part of its early losses. After dipping to a low of 2697 points during the week, Nifty futures closed the week on a better note at about 2815, though still 1.66 per cent short of its previous week’s close.
Outlook

Nifty future failed to scale above 3250 in the recent rally, which suggests that the days ahead for it can be painful.

Though it briefly broke the 2750 support, it managed to recover on Friday, to close above that level quite comfortably.

But despite the pullback, we remain doubtful of its ability to break past 3250.

While a move past 3250 can take it to 3550, a fall below 2750 can take it to 2250, though it may face a minor support at 2550.

Friday’s rally however may have been driven mainly by short covering.

The pruning of the discount between Nifty’s future and spot prices validates that.

There was also an accumulation of open interest positions of calls at strikes 2800 and 2900, while puts at strikes 2700 and 2800 saw the emergence of writers.

This suggests that Nifty futures may have a strong support around these levels.

Heightened trading activity in 2500 and 2600 puts also highlights the confused mindsets of traders.