After the Nifty?s 5% fall from its last week?s high, the sentiment among traders is turning bearish. According to derivatives experts, over the short term, the Nifty is likely to remain in the 5,350-5,400 range while facing selling pressure at 5,450 levels. The support range coincides with the market?s lows, seen during March and May 2011.
On wednesday, the Nifty closed at 5,404.80 down by 51.75 points or 0.95%.
According to some market participants, Nifty in a few trading sessions, could slide further to 5,200. This is because the overall undertone of the market is bearish and the traders are actually using market rebounds to add to short (sell) positions.
For instance, on Wednesday, while the Nifty managed to rebound past the 5,400-mark, the 9.7% rise in the open interest of the Nifty August futures was accompanied by an absolute decline in the values of Nifty and Nifty futures.
Nifty futures for the August series closed down 42 points at 5,424.4
Savio Shetty, research analyst, institutional derivatives at Prabhudas Lilladher, said, ?In Wednesday?s session, in-the-money Nifty 5,400 calls had a huge build-up of 12 lakh shares. This means that call writers hereon are pricing in a decline which is equivalent to the premium received or the price of the call which is about 110 points.?
He added that a convincing break of 5,400 indeed could act as a trigger for the market to slide towards its June 2011 lows of 5,200.