19 Dec - Nifty View

On Friday, Nifty opened Gap Up, ahead of the RBI News, moved further up during the first half, but saw a massive sell-off during the second half, which broke its strong support zone of 4700/4720. Below 4720, it fell nearly a 100 points more. Friday's move was a typical "shake-out" move, which would have shaken out the weak shorts, before breaking the strong support level of 4700. After a 120 point intraday fall, very few traders can Open Fresh Shorts, and Nifty fell another 80-90 points after that. Now, as long as it stays below 4760 Spot, consider the trend as Down. As of today, only a close abvoe 4840 will change the direction of the Trend. Till then, Bears are expected to make merry, and the Bulls can forget about the Santa Claus Rally.

The Nifty option OI Charts are given below:

Friday was another day which went totally in favour of the Bears. A huge 21 lacs+ OI was added at 4600 CE alone. What was more discerning was the huge covering by the Bears. 37 lacs+ OI was covered in strikes of 4700 PE, 4800 PE and 4900 PE. The level of 4700, which had the highest OI, is now going to be the toughest resistance for Nifty, as the writers of 4700 PE, who are stuck in shorts will try to exit at every opportunity now. The next good support for Nifty comes at 4500 level. However, it is interesting to note that in spite of such a big fall, resistance for Nifty as per the Options Charts comes way above at 4900 level. Hence, the Bears should soon start writing Call Options, else the prospect of a fierce short covering rally will be always on the cards.

For tomorrow, immediate resistance for Nifty Spot will now comes at 4675/4680 level and then at 4700/4720 levels. Any rise, if it comes towards 4740/4760 levels should be used to build short positions, with stoploss at 4760 on closing basis. On the downside, support for Nifty Spot comes at 4630/4640 levels. Below 4630, no predetermined support exists till 4550, and whatever support Nifty forms before that level is anybody's guess now. Hence, it is better to stay with the trend, and worry only about the resistances rather than supports at this point.

19 Dec - Nifty Spot resistance at 4675-4700-4720-4745. Support at 4640-4625-4580-4550 - www.niftypower.com

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