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Our market is likely to open strong given the strong international cues all over. The US market closed very strong on last Friday with nearly 1.5% gains and this morning Asia is also up strongly with more than 1% gain everywhere and Japan is leading the pack with 1.5% gains.

The SGX March Nifty has opened quite strong at 5138. It promises to be an exciting day at the bourses.

While the opening may be quite buoyant the moot point is whether it would be able to sustain or not since the Nifty is very close to the significant resistance zone between 5150 and 5190.

Our anticipation is that it would be quite a task for the bulls to take the market beyond the Nifty level of 5180 on closing basis at one go. It needs to consolidate and/or come down a bit, gather fresh momentum and then move up again to cross that barrier. However, no barrier is insurmountable if strong momentum persists; thus, we should not be rigid in our stance regarding the Nifty’s negotiating 5150 – 5190 range.

The PCR did come down marginally on last Friday to 1.32 from the earlier reading of 1.34 but it is above 1.30 and the initiative clearly rests with the bulls; the open interest picture suggests that more calls are being written at 5100 strike price in the Nifty and there is a good addition in the number of call options outstanding at 5200 strike price reflecting our circumspection about the Nifty crossing this 5150 – 5190 resistance zone at first attempt in this swing.

However, other than suggesting caution we do advocate that you start liquidating your long positions right away and start building short positions. That should happen when the market tells us clearly that it has decided to shift to the reverse gear.

On the downside, significant support exists at 5083 and then at 5050. On the way up, right from 5153 till 5189 there are lots of supply pressure points to contend with.

One thing needs to be mentioned here: the moving averages are suggesting strong bullishness and the 50-day moving average has turned strong upwards and other shorter term moving averages moving in the same direction, even the 89-day EMA has also turned upwards but only mildly. Consensus opinion barring choleric macro-bears is turning around for a bullish view. This is a clear indication of the smart money settling for buy at declines instead of pressing short sells. Please do not join those choleric macro-bears at this juncture. Use corrective swings in the market to buy unless the Nifty breaks 4950 again.

Rajat K. Bose