10 Jan: Nifty View - Downtrend?

From the past few days, we have been writing here that 5980 to 6125 is the trading range for Nifty and break on either side can give a sizeable move. Nifty took support at 5980 thrice on Friday and bounced off some twenty points, each time. However, once it broke it, there was relentless selling which saw the Nifty tanking nearly 100 points from 5980.

The trend has turned down now with Nifty at highly oversold levels. We may see some short term bounce OR a pause to correct the oversold indicators. But this market will remain a Sell on Rise market for now. Only a close above 6060 and 6125 Spot will change the picture for now. Till then, it is better to get out of longs and be on the short side on any rise.

The Nifty Options OI data of Friday show the Bear Power. Have a look at the the number of Calls added at different strikes - 29 lacs+ at 6200 CE, 27 lacs+ at 6100 CE, 29 lacs+ at 6000 CE and 20 lacs+ at 5900 CE. In total, more than 1 Crore Calls added by the bears. 6200 is the strike which has highest OI in Calls, crossing 1 Crore on Friday. This will be Mountain to climb this month. For the Bulls, the only silver lining is that there is still high OI of 50 lacs+ at 6000 PE and 5900 PE levels. Hence, we can see some sort of bounce towards 5980 levels before further fall. The writers of Puts at 6000 PE and 5900 PE should cover on any bounce to confirm the downtrend.

For tomorrow, intraday traders watch the level of 5915/5925 on the upside.If Nifty spot manages to hold 5920 levels in the morning trades, it will try to move up further towards 5950-5980 levels, where once again it will meet with selling pressure. On the downside, 5860 Spot is where immediate support should come for Nifty. Break of this may lead to further selling and fast move towards 5825-5790 levels. Since all indicators are reaching oversold levels, hence traders may wait for some bounce to go short on the Nifty and avoid creating fresh shorts at lower levels.

10 Jan: Nifty spot resistance at 5920-5950-5980-6010. Support at 5880-5860-5825-5790 - www.niftypower.com

Visit here for Intraday Nifty Tips