Volatility in the market has confused both bulls and bears as it has given a gap down opening and a strong closing. From a time cycle analysis, the uptrend is now 14 days old, but gains have not been much, considering the fact that the first buy was generated around 2,800 levels.
Technically, the Nifty has strong resistance above 2,980, which is the upper end of channel trend-line. So, one can expect a turning point at 2,980 level, says Kamalesh Langote, technical analyst of vfmdirect.com.
The market managed to close in the green despite weak Asian and global markets, and a decline in the October industrial output. The Nifty recovered from the day’s low of 2,812.55 to close almost unchanged at 2,921.35 on buying in index heavyweights Reliance Industries, ICICI Bank and State Bank of India.
The market, however, is expected to open on a weak note on Monday on weak global cues. However, given the fact that the domestic market has been throwing surprises, it is likely to recover after a gap down opening for the Nifty, says Siddhartha Bhamre, derivatives and equity analyst of Angel Broking.
Traders were seen writing 2,700 and 2,800 puts and covering their shorts at 3,000 call. This suggests that the Nifty has strong support at 2,700-2,800 and can move above the 3,000-mark, says Bhamre. Also, traders were seen unwinding 3,100 strike call, indicating that the index has the capacity to move beyond 3,100 once it closes above 3,000.
Nifty futures witnessed strong buying support below 2,850, while profit booking was seen above 2,900. Nifty January futures are trading at a premium of 10 points and have added open interest of 883,550 shares, indicating that bulls are building up long positions.
Among stock futures, Reliance Industries, State Bank of India, DLF, ICICI Bank and Tata Steel witnessed short covering at lower levels and some long build-up thereafter. Derivative analysts expect firm trend in these stock futures.
