Nifty to face strong resistance at 3,000

F&O OUTLOOK

The year 2008 ended the five-year bull run with both the benchmark indices — the Nifty and the Sensex — declining over 50 per cent each.

While investors are hoping a relief in 2009, the indices ended the last day of 2008 on a losing note. The Nifty ended the day in the red with expectations that it would face resistance around 3,000.

Technical analysts expect relief after a disastrous 2008. Going forward, the market could witness a relief rally. In the short term, the Nifty could correct till 2,800, but in the medium term to long term, the market is expected to bounce back.

The trading pattern in Nifty options suggested that call writers were covering their 2,900 strike calls and a few others were writing 3,000 strike calls. The 3,100 and 3,200 calls witnessed fresh short build-up and unwinding of long positions. The dramatic changes in the trading in call options in today’s trade suggested that traders were expecting strong resistance for the Nifty around 3,000 levels.

The put options traders were seen buying 3,000 strike puts and hedging with selling 2,900 strike puts. This indicated that the Nifty has been facing resistance above 3,000 and has strong support at 2,900-level.

The 2,800 put options are showing the highest built-up of open interest and, hence, if the Nifty closes below 2,900 levels, it has strong support at 2,800-level. The Nifty January futures shed open interest of 598,100 shares despite an intraday increase of 2.1 million shares. The Bloomberg data suggest that traders have booked profits above 2,980 levels and initiated short positions above 3,000 levels.

Satyam Computers was up 6.3 per cent on short covering. The January futures of Satyam has shed open interest of 3.46 million shares as traders expect the stock to move up further on a strategic buyout in the near future.