With more than a 2% decline seen on Monday, the Nifty is now hovering around the crucial 5,300 mark. Experts believe that 5,300 may turn out to be a crucial hurdle for the index in the near-term. However, on the downside with supported levels at 5,180-5,175 ; a range that coincides with its February 2011 low and October 2009 high. Nifty on Tuesday closed at 5275.85.
? Even as the Nifty has broken below the 5,300 mark, which it briefly managed to overtake during Tuesday?s trading session ; traders are looking at February 2011 lows as the next crucial support for the market. As long as the market pulls off from this low, the June series may end near 5300,? said a derivatives? analyst.
Even the fresh open interest positions of the Nifty June series support this view. After Tuesday?s trade, June 5,200 puts not only gained the maximum open interest of 9.25 lakh shares for the session but also held the highest open interest of 81.54 lakh shares for any strike on the put side.
On the other hand, Nifty June 5,300 calls gained the maximum open interest of 6.33 lakh shares on the call side while most other strikes experienced a decline in its open interest.
According to Vijay Kanchan, head of institutional derivatives at JM Financial ?The extent of open interest in any strike may not necessarily indicate the directional trades undertaken by the option traders because a majority of the professional traders trade volatility-based strategies. However, given that Nifty June 5,200 puts have settled at about R40, option traders are factoring in a support near 5,160.?
The near-term resistance for the index is expected to come at 5,327-5,330 , coinciding with Nifty?s intermediate low of May 2011. Analysts expect the Nifty to inch-up towards 5,380-5,400 mark once this initial resistance is taken over.
?The Nifty is likely to remain above the 5,300 mark till the end of June Future series. There is a likelihood of a significant rebound in the large-cap stocks which can take the Nifty towards 5,400 in the next couple of sessions, which has now turned into a very critical technical as well as psychological resistance for the market,? added Savio Shetty, research analyst at Prabhudas Lilladher.