Bull charge may take index beyond 4,800

Large-cap stocks were back in action on Wednesday, after moving sideways in the last couple of days, pushing the Nifty past the crucial resistance level of 4,650. The index closed at 4,655 on strong buying in heavyweights, such as Reliance Industries, ICICI Bank and Larsen & Toubro. HDFC Bank, Reliance Communications, Reliance Infrastructure and Tata Power surged over 5 per cent on fresh long positions.

Unwinding has been observed in the 4500 and 4600 call options in the last three days as participants who had taken short positions covered their positions. This means the support for the Nifty is expected to move up from 4,500 to 4,600.

Traders were seen buying the 4,700 and 4,800 calls on the expectation that the bulls may take the index beyond the 4,800 levels going forward. The options traders were seen selling the 5,000-5,100 strike calls as they see resistance above these levels.

According to technical analysts, the bigger picture hints at substantial upside from the current level, but after a healthy short correction. The 4,500 put added an open interest (OI) of 514,700 shares, mostly through sell orders. The 4,300 and 4,400 puts too witnessed fresh OI build-up, which suggests that the Nifty has strong support around the 4,300-4,500 levels.

The Nifty June futures, which has closed at par with spot on Tuesday, added 5 points in premium on Wednesday. It added an open interest of 1.91 million shares intraday, mostly through buy orders.

After the closing session, the open interest in the Nifty futures increased by 705,100 shares, indicating unwinding of short positions intraday and fresh long build-up thereafter.