NIFTY

NIFTY retraced almost 23% from its recent high of 4560 and has again bounced back strongly with good volumes. The next area to watch is the recent high of 4560 to 4650 as supply can come in from people who got trapped last time when nifty went up to 4690 that supply will have to be absorbed if the up move has to continue. Also there is some –ve divergence developing in the momentum and RSI lines which is a reason enough to careful close to 4600.
NIFTY OI DATA
The 4300 to 4400 puts added OI and now have more open positions that their respective calls at 4300 and 4400 thus suggesting 4400 and 4300 to be strong support. However there is build up of OI in 4600 calls which suggest resistance at 4600 this coupled with the –ve divergence should warrant caution in the region of 4600.NIFTY futures closed in premium along with increase in OI suggest long build up.