Nifty to face strong resistance above 3,400

The Nifty has retreated from the day’s high of 3,304 to close at 3,257 on profit-booking in key index stocks such as Bhel, DLF, Reliance Industries (RIL) and State Bank of India (SBI).

However, the Nifty has not gone down below Thursday’s low of 3,061 and so the support level for the index has moved up to 3,155 from 3,060 earlier. The Nifty is now poised to target the 200 daily moving average (DMA)-level of 3,455.

Profit-booking was seen in the Nifty April futures, which closed with a three-point premium to the spot and shed an open interest (OI) of 159,320 shares. The Bloomberg data suggested that profit-booking came in at an average index level of 3,250, probably due to the weak opening of the Dow Jones futures. However, the index improved significantly thereafter on sustained buying at an average index level of 3,275.

Option traders were seen unwinding their short positions at 3,200 call options as they expected the index not to move below the 3,200-level. However, call writing was significantly high at 3,400-3,600 levels, indicating that the index has strong resistance above 3,400. However, strong long build-up of 802,050 shares was seen at 3,300 call options, which suggested that the index has built a strong support above 3,250.