Support for index seen at 5,000 level

The Nifty is likely to move around 5,200 in a day or two on the back of long build-up in December futures and key stock futures. The December futures rose 100 points and closed at 5,132, the highest since October 16, but on thin volumes, indicating absence of bears.

Bloomberg data suggest more sell-side trades, which were absorbed through build-up of long positions in 1.08 million shares. This is a clear indication of positive opening tomorrow under normal conditions and a possible crossover of the October high of 5,181.

The participants in Nifty call and put options supported this view by writing puts at 5,100-5,200 levels. The 5,100 put added 926,550 shares in open interest, mostly through sell-side trades, indicating that short-term support for the Nifty has gone up above 5,100. The 5,200 put added 602,200 shares in open interest out of the trading volume of 1.20 million shares, indicating the Nifty’s move above 5,200 in the near future. The support for the index on the basis of the highest put open interest is at 5,000.

Call options traders expect the Nifty to trade above 5,100 as Bloomberg data suggest change of hands and short-covering in 5,100 strike call options. However, the Nifty is expected to face strong resistance between 5,200 and 5,300 as traders wrote call options at these levels. Also, the 5,200 call has the highest open interest among call options, which suggests the Nifty has strong resistance above 5,200.

Technically, the Nifty is well placed for a fresh upside with five-days and 14-day RSI of 65 and 59, respectively, not showing any overbought status. The Fibonacci price projection numbers suggest the Nifty can move up to 5,343, which is 161.8 per cent retracement of the recent fall from the high of 5,138 to 4,807.