7 Feb: Nifty View

Nifty fooled a lot of traders on Friday by giving a false breakout above 5545-5550 zone and then fell more than 150+ points, breaking 5400 in the process and closing well below it. The move must have trapped a lot of traders (including us!). These are the times when traders understand the importance of a stoploss! Trading is a game of probabilities and we should always take a high probability trade rather than questioning it or being afraid of it. But once we are proven wrong, it the Duty of the Trader to accept the Market's Supremacy and Bow Out of the Trade. Those who follow this simple approach, will never lose in the long run.

What has been surprising though, is the FII and DII figures from the NSE. The data shows that both of them bought on Friday. Also, have a look at the Options Open Interest Table given below:

Although we saw a good amount of Call writing at 5400 and 5500 levels, the puts did not cover in a hurry. The Bulls would certainly seem to think that a bottom is near, else they should cover their written Puts sooner than later. Even if these Puts are a part of Covered Shorts (Short Future and Short 5400 PE), then also these guys would not be expecting much downside from these levels. It will be interesting to watch the action at 5400 Strike from tomorrow to get a further clue on the market movement. For now, the Options table still suggests support for Nifty at 5400 Levels and Resistance at 5500 and above levels (though a weak one).

For tomorrow, immediate resistance for Nifty Spot comes at 5420-5425 level, above which, it will try and reach 5445-5460 levels. At higher levels, it is again expected to face selling pressure. On the downside, support for Nifty comes at 5360-5355 levels, below which, it is expected to slide towards 5320-5300 levels. At the extreme support and resistance levels, we would expect to see some quick volatile moves. Trade cautiously.

7 Feb: Nifty spot resistance at 5420-5445-5460-5495. Support at 5390-5360-5320-5300 - www.niftypower.com

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