F&O Outlook: Nifty has strong support at the 4,800
BG Shirsat / Mumbai Nov 20, 2009, 08:51 IST
The Nifty could not hold the 5,000 levels and closed at 4,989 on profit booking at the higher levels. Only five of the fifty index components of the Nifty gained which indicate broad base profit booking. If the Nifty breach the 4,940 levels tomorrow, it can move down around 4,860 levels.
The Nifty November futures closed at 3 points discount to spot and shed 1.46 million shares in open interest (OI) indicating unwinding of long positions. However, the Nifty December futures closed at premium to spot Nifty and added 1.44 million shares in OI indicating long rollovers.
According to technical analyst at HDFC Securities, the benchmark indices have formed a ‘High Wave’ pattern indicating indecisiveness or a sideways movement. The first signal could come when the indices (Nifty and Sensex) will stop making a new high and the previous day’s low is breached and the indices stays below it for at least a day or two. Technically, the market enter crucial trading day tomorrow to keep the current bull-run moving as the benchmark indices have made lower highs and lower lows today.
The put options traders covered their shorts at 4,400-4,700 puts despite the Nifty is trading well above these levels. The 4,800 and 4,900 puts together shed 0.95 million shares in OI through buy side trades. The traders also covered significant short (1.15 million shares) at the 5,000 strike put as they expects the index would expire below this level. However, the Nifty has strong support at the 4,800 levels as 4,800 put hold the highest OI among put options.
Call option participants have been unwinding long positions at 4,700-4,800 on expectation of fresh correction in the near future. The 5,000 and 5,100 strikes puts witnessed change of hands and build-up of short positions as participants expects the Nifty unlikely to trade above the 5,100 levels and it may fall substantially below the 5,000 levels.
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