Bullish above the 3000 level

F&O OUTLOOK

The Nifty bounced back from the technical support level of 2850 and closed at 2975, marginally below the resistance level of 3000. This sharp rebound from the support level has been attributed to strong global cues and short covering in the index heavyweights – Reliance Industries, State Bank of India and ONGC. The Nifty futures witnessed short covering around the 2895 levels, which pushed the futures to the day’s high of 3027.

Kamalesh Langote, technical analyst of vfmdirect.com, says that indices have formed a bearish pattern in the last two days. If the Nifty closes below the 2850 level next week, then it will continue in the correction mode. Look out for bullishness above 3000 and continuation of correction below 2850 next week. The answer should be known in the first 15 minutes of trading on Monday, he expects.

The F&O indicators for the day suggests that the index has strong support at the 2900 levels, indicated by the highest open interest at 2900 put option. Resistance is seen above the 3000 levels as put call ratio (PCR) of 0.73 at 3000 strike favours bear operators.

However, the Nifty November futures closing with a premium of 13 points and an added open interest of 1.36 million shares indicate that bulls have initiated fresh long positions. This means the Nifty is expected to trade above 3000 on Monday. Also, there is significant rise in open interest at 3200-3400 strike call indicating that some operators have taken a bullish view on the market.

Manas Jaiswal, technical analyst of Emkay Share, says that the pullback which began from October 27 has been on account of a piercing pattern on the weekly chart which target the Nifty at 3450.

On the daily chart index, it is making an“inverse head & shoulder” pattern and the neckline is placed at 3242. He expects the Nifty to pierce 3242 in the coming days and target the 4305 levels, which is a 50 per cent retracement level of its fall from 6357 to 2252.