Nifty poised to close above 3,200 level

The Nifty level of 3,150, which saw strong resistance last month, is expected to act as a support level now as options traders were seen writing strike puts at 3,100-3,200. In fact, call options traders expect the Nifty to move up further on Monday and close above 3,250 levels, as is evident from their buying 3,300-3,500 strike calls on expectations that the current momentum is likely to continue in the near future.

Technically, the Nifty is poised to close above 3,234, which is a 161.8-per cent Fibonacci retracement of its recent fall from 2,970 to 2,543. The historical trading range suggests that the Nifty can go above its 200-day moving average of 3,455 and, after that, it can target 3,661 levels, which is a 261.8-per cent Fibonacci retracement level. Data pertaining to call options transactions shows that traders are expecting this to happen soon.

Traders were also seen unwinding short positions at 3,100 and 3,200 calls, indicating fresh support levels for the Nifty. The 3,300-3,500 call options added an open interest (OI) of 1.58 million shares, which suggests that traders expect the index to move up further.

The Nifty April futures witnessed a short covering of around 3 million shares during intraday at around 3,200 levels. The futures, which closed at a premium of 11 points to spot, has added an OI of 1.47 million shares at close, indicating a fresh long build-up. The Nifty May futures too witnessed an intraday short covering and fresh long through the addition of 154,600 shares in OI on a trading volume of 5.91 million shares.

The short-term indicator – the weekly relative strength index (RSI) – is at 81, which indicates that the market is trading in the overbought zone. Profit-booking was also noticed On Thursday as benchmark indices pared gains in late trade after moving up by more than 5 per cent intraday.