Nifty placed at crucial levels

F&O OUTLOOK

The discount widened from three points to 12 points and open interest rose by 2.45 per cent, indicating a built-up in short positions. The OI, however, declined by two per cent at the close-out.

The 5200 level is also a resistance level for the call options traders, going by the rise in open interest. The 5200 call options OI increased by 10 per cent during the week, largely on account of call writing.

The week saw fresh call writing at the strike prices of 5300, 5400 and 5500, indicating a strong resistance for the Nifty at these levels. The put OI built-up at 5000 (60.4 lakh shares) and 5100 (27.48 lakh shares) strike prices reveals a strong support at these levels.

Call and Put writers take contrary views on the prevailing market conditions. The call writer expects a fall in the value of underlying index or stocks, while the put writer anticipates a rise in value of the underlying.

According to technical analyst of JM Financials, there are enough indications on the daily and weekly charts to suggest that bulls would not stop before reaching the level of 18000-Sensex/5300-Nifty. The next crucial target for the Nifty, above 5156, would be 5298. This would correspond to 17500-17735 on Sensex.

A decisive crossover of these levels in the next six trading session would give a confirmation of the bullish trend.