The Nifty opened on a positive note and closed the day at 3,042 with a gain of 60 points. Nifty December and January futures closed 2.50 per cent higher as investors covered their short positions in the final hours of trading. Short-covering was also seen in key heavyweights such as Reliance Industries (RIL), ICICI Bank, State Bank of India (SBI), Bharti Airtel and Tata Steel.
Nifty January futures added an open interest (OI) of 1.42 million shares, while their premium to December futures widened from 5 points to 12 points, indicating that F&O players have rolled over some long positions. December futures added an OI of 229,000 shares at the close of the day, which was substantially lower than the intraday addition of 3.88 million shares, which shows unwinding of short positions.
The unwinding of short positions was also seen at 2,900 and 3,000 call options, indicating that traders expects the Nifty to trade above the 3,000-level. The 3,100 call options added an OI of 252,850 shares as traders expect the index to climb further up and cross the 3,100-level before the expiry of December contracts.
Strong support for the Nifty was seen at the 3,000-level as options traders wrote puts. Resistance was seen at the 3,200-level as there was a significant build-up of OI through writing of call options.
Technical analysts expect the current uptrend to be intact with support at 2,950. There could be a trend reversal only if the Nifty breaks and closes below 2,950, Support for the index is seen at 2,860. The five-day Relative Strength Index (RSI) has moved above 80 to 83, which indicates over-bought positions.The end-of-the-day chart suggests that the current uptrend has taken a longer time than the most recent rally and gains too have been smaller than the most recent rally. Going forward, the Nifty could target the 3,100-mark and thereafter the 3,168-level.
