Uptrend may sustain for a while

F&O OUTLOOK

The Nifty surpassed the strong resistance level of 5000 and closed at 5037, up 1.6 per cent. The next technical target for Nifty is 5133, which is also the 200-days moving average level.

The uptrend is likely to continue for some time. The Nifty PCR firmed up to 1.35 from 1.17 and the Nifty May futures rollovers increased from 33 per cent on Thursday to 40 per cent, indicating a built-up in fresh long positions.

The total rollover in Nifty May futures is higher at 13.1 million shares as against 10.9 million shares at the same time last month. Moreover, the May futures are trading at a premium of 10 points over the April futures as against a discount of five points during the corresponding period last month.

However, call writing at the strike price of 5100 indicates a strong resistance at that level. The current uptrend is likely to fizzle around the 200-DMA level.

The 5100 April call options open interest rose by 22.3 per cent and 5100 May call options open interest increased by 46.7 per cent, indicating that bears are unlikely to surrender the 5100 levels.

Also, the Nifty April futures open interest points to limited price movement ahead of the current month derivatives expiry. The OI in Nifty April futures is considerably low at 19.9 million (28.59 million in March futures), which shows that bear operators had squared their short positions.