Business IdeasShort-term support expected at 5,000, resistance above 5,200
The Nifty closed above 5,000 due to short-covering on healthy GDP numbers for the September quarter and easing of concerns about the debt default in Dubai. The Nifty December futures saw short-covering above 5,030 and there was long build-up below 5,010. In the end, futures shed 813,250 shares in open interest (OI) and closed at four points premium to the spot, indicating unwinding of short positions.
- Support seen below 4,700 - Nifty may attain a new high in a day or two - Index may attain a new high in a day or two - Gap-down opening for Nifty seen - Nifty may hit new high this week - Profit booking seen next week
The Nifty was expected to continue its pull-back as most index heavyweights saw short-covering and build-up of fresh long positions. Tata Steel was up 6 per cent as its December and January futures together added around one million shares in open interest through buy-side trades. Steel Authority of India and NTPC added over one million shares in open interest each, while Reliance Industries, ICICI Bank and Infosys Technologies rose over 1-2.5 per cent and added over 300,000 shares in open interest each, indicating long build-up. Short-covering was seen in Bharti Airtel and Suzlon Energy, which rose 5.5 per cent each and together shed 3.50 million shares in open interest, indicating short-covering.
Trading data show unwinding of short positions in 4,700-5,100 calls and short build-up at the 5,000 put. Unwinding in call options was mostly through change of hands and some buy-trades while build-up of open interest in the 5,000 put was through sell-side trades. This means the index is likely to trade above 5,000 and even move above 5,100 in the near future. Short-term support is expected at 5,000 levels.
Technically, the daily RSI at 54 is close to the oversold line, while moving averages are almost at the price action. Gautam Shah, a technical analyst at JM Financial, expects the Nifty is set to retrace recent losses and get back around 5,100. The open interest build-up in 4,900-5,000 puts and the 5,200 call suggest the index has strong support above 4,900 and resistance above 5,200.