Markets are on a crucial perch

F&O OUTLOOK

The Nifty closed the day at 4,864, just two points higher than Fibonacci price projection of 4,862. The 4,862 level is 161.8 per cent of the recent high and low swing of 5,368 and 5,055 in Nifty. The next downside level for Nifty is 4,549, which is 261.8 per cent in Fibonacci price projections series.

The bull market is over, aver some market analysts. It does not mean that we are in a bear market. But if we continue in a similar mode, time-wise troubles will arise, according to Deepak Singh, analyst, State of the Markets.

The market has decisively broken the trendline support and relative strength index (RSI). The next support for Nifty is 4,600, said Kamlesh Langote of vfmdirect.com.

However, the Nifty March futures discount narrowed to 30 points towards close from the previous day's 59 points, probably due to short covering or short positions changing hands, according to a derivative analyst at Asit C Mehta Securities.

The Nifty futures open interest declined by 4.37 lakh shares despite trading volumes of 35.92 million shares. This indicates that bears were wary of market direction and squared their short positions during the day.

The Nifty PCR declined from 1.17 to 1.16 on account of OI addition in the 4800, 5000 & 5100 calls and 4600, 4800 & 4900 puts.

The Nifty has short term resistance at 4909 and 4970, while strong support lies in the band of 4779 and 4803. Fresh weakness will arise if the support band is breached decisively, and the Nifty may go on to test the previous bottom of 4448.