Next big resistance at 5,400

As expected, the S&P CNX Nifty closed at 5,201 levels on long rollovers in index futures and key stocks futures. The index is expected to consolidate above 5,200 in the new series before moving above the short-term target of 5,350. The rollovers in the Nifty January futures, at 22 million, were at a five-month low, which indicates that bears are waiting in the wings. At similar point in July 2009, the Nifty had gained over 500 points in a couple months to move above 5,000 in September 2009. A similar trend may see the Nifty moving above 5,500 in the near future.

Nevertheless, the Nifty January futures saw long rollovers as they closed at a 14-point premium. The open interest build-up was mostly through buy-side trades. Derivatives analysts indicate that in the absence of any significant short rollovers, the Nifty can now consolidate above 5,200 before moving to much higher levels. Options traders expect the Nifty to move around 5,400 with support at 5,000. The journey between 5,200 and 5,400 is likely to be volatile as open interest build-up in these calls has been mostly through a mix of buy and sell trades. The resistance is expected to be above 5,400 with this strike call holding an open interest of 2.3 million shares, mostly through sell-side trades. The Nifty once again traded in a range of 20 points after opening above 5,200. According to technical analyst Gautam Shah of JM Finance, the bulls are buying time before a confident move above 5,200/17,500. Most technical indicators remain positive and hence momentum should pick up in the next few trading sessions. The oscillators are slightly overbought but are not an immediate concern. After 5,200, the next big resistance for the Nifty is seen at 5,400.