F&O Outlook:Markets are looking for direction

The PCR at the strike price of 5000 was rangebound between 0.8 and 1, while that at 5100 remained around 0.5-0.7, indicating the Nifty had support as well as resistance at 5000 levels and resistance at 5100 levels.

PCR below one suggests resistance and above one translates into support. The Nifty has hence witnessed range bound trading in the last four days, moving between the support and resistance levels of 5000 and 5100.

Technically, the markets behaviour in the last four trading sessions was corrective in nature. Any gradual corrections have bullish implications and hence the markets are expected to move up and target the 200 DMA levels. The 200 DMA is 5130 for the Nifty and 17,200 for the Sensex.

The technical set-up at this point is not completely bullish as the daily oscillators and indicators are overbought, while the 200-EMA is testing the bulls. Based on the long-term bull market trendline, the Nifty has a resistance in the 5000-5100 zone.

The call put ratio (CPR) of 2.30 at the strike price of 5100 also favours the bears, as it translates into resistance at 5100 levels. The PCR of 1.0 at the 5000 strike price in new May series contracts indicates that Nifty has an immediate support at 5000.

The rollovers in May futures were lower at 27.03 lakh shares compared to 27.61 lakh during the same time last month. The Nifty May futures contracts ended the day at a marginal premium of three points.