Will Nifty hold 4700 in December series?

November 28, 2011   ·   0 Comments

www.stockssavvy.comOn Friday, yet another session began on a pessimistic note and traded with negative bias throughout the day, Confirming the lowest Weekly close (4710) in last two years. On the upside, indices faced intraday resistance near 4775 level, which coincides with the value of “5 Day EMA”.

After several attempts, finally bears managed to break important support level of 15745 / 4718 and indices closed below this support after nearly two years. After breaching 15745 / 4718 level, indices traded within the price range of Wednesday’s trading session. Therefore, going forward, Wednesday’s high of 15970 / 4780 may act as a resistance in coming trading sessions. If indices manage to sustain above this level, then they are likely to test 16213 – 16400 / 4854 – 4930 levels. However, the Weekly momentum oscillators and “3 & 8 EMA” are still negatively poised. As a result, violation of 15479 / 4639 level may reinforce negative momentum and then indices may drift towards the next support level of 15330 / 4540. This level coincides with the Weekly “Horizontal Line” support.

 In a worst case scenario, if indices sustain below 15330 /4540 level then the possibility of testing monthly 50% Fibonacci retracement level of the rise from 7697 / 2252 (October 31, 2008) to 21108 / 6338 (November 30, 2010) cannot be ruled out. This retracement level is at 14400 / 4300.

The Nifty Dec. future closed at a Premium of 0.90 point against a Premium of 25.15 points. The January Series closed at a Premium of 20.95 points. The Implied Volatility of at the money options is increased from 26.63% to 27.32%. The -OI has increased from 0.90 points to 1.26 points.

FII’s continue to sell in cash market segment; they were net seller’s worth of `805/- cr. on Friday’s trading session. On Derivatives front they were net sellers in Index futures indicating some more shorts build up by them, while in index options they were net buyers.

On Options front there was some buildup visible in out-of-the money and at-the-money put options ranging from 4400-4700 strikes, while in call options 4800 and 5100 strike price has seen maximum buildup. Interestingly good amount of buildup was visible in deep out-of-the money put options especially in 4000 strike price.

The highest open interest at 4500 suggests that we may go till those levels in December to test those levels if 4700 doesn’t sustain. December has more & less proved to be a bear month for Nifty when FII find them in a festive mood which more or less keeps them out of the markets. It won’t be though easy to break 4700 on consistent basis. One should try to accumulate stocks/mutual funds whenever markets test these levels.

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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