Nifty forms temporary top; avoid longs, stay stock-specific

Thursday will see the expiry of weekly options and that will play out through the day. Currently, the 11,000 level continues to have the highest concentration of Call open interest followed by 10,800. The resistance points are likely to shift lower as strike prices 10,700 and 10,800 witnessed significant Call writing during the day.

Nifty is likely to see a soft start to Thursday’s session and the 10,765 and 10,820 levels are likely to act as key hurdles, while supports will come in at 10,610 and 10,515 levels.

All in all, Nifty appears to have made a temporary top in the 10,800-10,850 zone, and this has happened on the expected lines. No sustainable up-move shall occur unless the index moves past this zone convincingly. On top of everything, the 200-DMA, which currently stands at 10,884, remains a major resistance.

We recommend avoiding any fresh long positions in the event of any short-covering, if at all it occurs, Purchases, if any, should be kept highly stock-specific and limited. There is a high possibility that all up-moves if they occur, shall get sold into at higher levels.

Nifty remains highly vulnerable at higher levels in the present technical setup. A cautious approach is advised for the day.

Nifty Bank (22586) 22956 is the next technical target and beyond that to 24229 as long as 21877 holds’ the Nifty Bank achieved our target of 22956 and sold off…technically now a slide to 21877 is possible…stiff resistance exists at 22956…    

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