Nifty may cross 3,100-mark soon

F&O OUTLOOK

The Nifty today closed at 3,047.75 on considerably high trading volume in both cash and F&O segments, registering a marginal gain of 13.30 points over yesterday’s close. The rise is attributed to the bullish sentiment and across-the-board buying in consumer durables, realty and banking stocks. The stimulus package announced by the Reserve Bank of India (RBI) and the government after today’s trading hours will lead to fresh buying on Monday, and the Nifty may cross the 3,100-mark.

Technical indicators are trading in the overbought zone, while the daily chart indicates that the market is in sell mode. This suggests that resistance for the Nifty is around 3,100 levels. F&O traders are hoping for a breakout for the Nifty above 3,100 in the coming days. That is why they were seen unwinding their short positions in 3,200 strike level call options.

Also, chances are fairly high for the Nifty to target 3,300 levels if the short-covering and build-up of fresh long positions at 3,300 strike calls are any indication. The support for the Nifty remains around the 3,000-level, and is gradually moving towards 3,100 levels, indicated by unwinding of shorts at 3,000 strike calls and building of short positions at 3,000-3,100 strike puts.

The Nifty January futures continued to trade at a premium and shed open interest of 339,400 shares, indicating that bears were covering short positions. The trading data indicate that the Nifty has strong buying support around 3,050 levels, while profit-booking and resistance are seen above 3,080 levels. Technical analysts are advising buy above 3,100 with stop loss of 2,960.

The January futures of Reliance Industries (RIL) closed above Rs 1,260 as strong buying for the stock emerged around Rs 1,280 levels. The Bloomberg data of intraday trade in RIL indicate short-covering by traders near Rs 1,290 levels and profit-booking above Rs 1,300 levels. Traders were seen buying 1,290 strike calls and even unwinding shorts at 1,320. Also, a few traders were seen buying 1,350 strike calls, indicating that the stock can move up to Rs 1,350 if it closes above Rs 1,300 levels.