5,080 crucial for sustained rise

The Nifty closed the session in a Doji pattern for the third consecutive day on Friday, indicating continued uncertainty at these levels. The daily relative strength index (RSI) at 58 is on the triggerline indicating caution. RSI can fall below 50 after two days of negative close and moves to the overbought zone after two days of positive close. According to technical analyst at Sharekhan, the support at the 5,080 level remains crucial for the uptrend to continue.

The Nifty maintained the support of 5,080 on Friday, and closed at 5,108 on profit-booking. According to F&O data, foreign institutional investors (FIIs) have build-up short positions in the index futures and booked profit in stocks futures. This means there is a possibility FIIs would like to cover short positions at lower levels resulting in a modest correction going forward.

The support for the Nifty remains at 5,080 and resistance above the 5,200 level. The Nifty made an intermediate top at 5,181.95, and an intraday high of 5,181 on December 3. Thus, for a very short-term, this level is acting as resistance. So analyst at HDFC Securities expect a slight correction in the Nifty.

The trading volume in call and put options suggests that the index has strong resistance above the 5,200 level and it may lose its support of 5,080 going forward. This is because the 5,200 call continues to add shares in open interest (OI) through sell-side trade, indicating a short build-up, while the 5,100 call added 150,750 shares in OI through sell-side trades.

The support for the Nifty continues at the 5,000 level as this strike put added 257,050 shares in OI through sell-side trades. It holds the highest OI among the put options.

The participants now expect the Nifty to find it difficult to hold the 5,100 level as they were seen covering short positions at the 5,100 put through buy-side trades.

Among the stocks futures, long build-up was seen in Steel Authority of India, Tata Motors, NTPC, Hindalco, Ranbaxy and Cipla. Short-covering was seen in Bharti Airtel, DLF, Idea Cellular, Suzlon Energy and Unitech. Fresh short build-up was seen in BHEL, Hero Honda and Hindustan Unilever.