13 Dec - Nifty View

In Yesterday's Nifty View, it was given that a break of 4840 would be a first indication of a breakdown, to be confirmed by a break of 4800. Nifty opened up on positive global cues today, but quickly gave up its gains to break 4840, and then confirmed the breakdown by breaking 4800 and closing near the lows at 4760. The downtrend has been confirmed, and as of now, 4920 Spot is the invalidation point for this downtrend. Any bounce if it comes towards 4810/4840 will be a reselling opportunity this week. On the downside, it is now again approaching the lower end of the broad range that it has been trading in since August of this year. A break and close below 4720, may this time bring bigger downsides.

The Nifty Option Open Interest charts are given below:


As on Friday, the day belonged the Bears once again, with very little action from the Bulls, except for covering of Puts at 4900 PE and higher strikes. The Bears added a big amount of 26 lacs+ OI at 4700 CE and 4800 CE strikes. The biggest OI from the Bulls still remain at 4700 PE, and they have not yet covered their positions. Even the OI at 4800 PE is more than that of 4800 CE, although Nifty closed well below that level. Either these Bulls are confident of holding 4700 and a revisit above 4800 level, or else they are soon going to panic, if Nifty breaks and closes below 4700 this week. Hence, the level of 4700 on the downside, and 4810 on the upside are the next levels to watch, and take trading positions.

For tomorrow, immediate resistance for Nifty Spot comes at 4780 level. Sustaining above this, it will attempt 4805/4810 levels, where again the Bears are expected to be active. As given earlier, 4810/4840 can be a reselling area for Positional Shorts, as this zone will be toughest to cross in case of any dead cat bounce. On the downside, support for Nifty Spot comes around 4720 level. A break of this level will lead Nifty to test lower supports of 4685/4690 and 4640 levels. 4640 was the recent low, and the Bulls will try to defend it and try to make a higher low this time. If they fail, the the pattern of lower lows, lower highs will continue, and there will be no respite for the Bulls.

13 Dec - Nifty Spot resistance at 4780-4810-4840-4895. Support at 4720-4685-4640-4610 - www.niftypower.com

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