It was a range bound session and upper levels got capped near the resistance zone of 5440. Nifty futures tried to break 5440 in the opening trade but could not sustain at higher levels. Though Nifty could not make a new intra day high we could see some upmove in some of the major large cap stocks like SBI, Reliance, L&T and this is really a positive sign for the market. As a buyer I need to wait for 5440-50 zone to be taken out on the upside so that I can get a better clarification regarding the upmove. From the volatility data it is evident that nifty is getting resisted only due to short positions and not long unwinding. Thus we could conclude an upmove only till the mentioned zone, logically if there are more short positions the sharper would be the move. On the downside 5320-5330 could be an immediate support zone and it is good that nifty could spend a range bound session by testing the lower levels. These kinds of markets would give traders a little more time for accumulation and that would define momentum on the upside or downside and all the major moves emerge from a boring market. SBI is close to 2330 and a short covering rally would be possible above these levels that could take SBI to another 70-80 points on the upside. Lot of buying is happening on the lower end of the range but the short positions on the upside are limiting the move. It would give more time for options traders to initiate a long straddle as the budget session is close by. On the downside I would wait for a much deeper cut to be a buyer or either wait for an upside break out for a buying position. Thus even if it gives a range bound session it would be good for options traders as one could get the near out of the money options at a cheaper rate. Let’s keep 5320-5440 as the range and above 5440 it is a break out trade on the upside. Keep an eye on Jindal steel and ICICI bank as these stocks would give a leading indication for any trades in nifty.
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