Firm global markets and short covering on the day of derivative settlement saw Indian equities close higher on Thursday. However, investor apprehension was conspicuous on a day most newly-added contracts on the Nifty were short positions.
A short position is the cash market equivalent of sell. Mirroring the trend, Nifty September contracts ended at 4,350, at a discount of 62.30 points from the underlying.
“A lot of short positions have been built up on the Nifty. The index may witness some resistance around 4,435 levels, and that’s what the players would be looking forward to,” said Jitesh Ranawat, derivative analyst at Pranav Securities.
However, investors seemed confident in taking directional calls as most positions in the derivatives segment were carried forward. “The rollover has been good, with around 65 per cent of the contracts rolled over,” said Vijay Bhambwani of BSPLindia.com.
While the benchmark Sensex of the Bombay Stock Exchange ended the day higher by 128.70 points or 0.86 per cent at 15,121.74, the 50-share Nifty of the National Stock Exchange closed at 4,412, up by 52.7 points or 1.22 per cent. Most major indices in Europe and the Asia Pacific region ended firmer.
After holding up in the green, the indices strengthened towards the latter part of the trading session, as investors who had sold stock and index futures bought those back to wind up their positions.
However, with the Sensex sweeping up close to 7 per cent in the last five trading sessions, chartists foresee a correction in the near future.
“The markets have run up a little fast in the last five sessions and a correction looks due. The Sensex should find support first at 14,890 once 15,000 is breached and a stronger one at around 14,650,” says Prem Dega, a technical analyst.