NIFTY

NIFTY
The behavior of the nifty in the last 3-4 days was exasperating, it tested the patience right down to its limit, but as they say devil lies in details. The candle formed on Friday is a shooting star with highs around 4885 -4890 and that too with significant volumes indicating large no of people trapped in there and thus suggesting possibility of supply zone in that area. The upper resistance line though broken hasn’t been breached with conviction and by more that at least 3-4% so remain skeptical of a false breakout.
NIFTY OI DATA
1> The closing out of positions by call writers which I had hoped for hasn’t materialized and instead 4900 calls have more than 50 lac Open positions this coupled with the shooting star adds to the resistance posed by 4900
2> The 4600 puts have more than 65 lac open positions which suggests that nifty most probably wont go below 4600 in September.
3> 4700 puts have more than 49 lac open positions which suggests strong support at 4700, so better trade for a 4700-4900 range for the remainder of the series.
4> The futures positions have show a decrease in OI suggesting either long unwinding or short covering ( its either of the two because the rise on Friday is only mere points )
5> YEN vs $ is at 90.72 breaching of the 88 mark could cause carry trade unwinding ( however the difference between the interest rate of the two countries being very low in recent times the quantum of the unwinding could be a bit tempered)
Personal opinion
Closing above 4880 will certainly open up the way towards 5000, however seeing the sluggishness a bit of rest or down ward movement can be ruled out. Breaching of 4800 mark on closing will most probably see nifty drifting towards 4700. Stocks to be watched are RIL a close above 2150 can propel it to 2220 and then who knows where.