Nifty set to build up on 5000 levels

Driven by the 2.5% rise on Wednesday, Nifty has managed to cross a couple of yardsticks ��� first time in nearly three weeks. First, with a rise of more than 120 points, the index managed to close above a key 5000-mark for the first time since October 22.

This rise also resulted in the index to close above its 20-DMA, a medium-term market indicator, for the first time since October 22. Moreover, the gap between a positive cross over between Nifty���s 5- and 10-DMAs widened on Wednesday for the first time in 14 trading sessions.

Also, Nifty November futures closed at a premium to the spot index, with a rise in open interest and volumes. This represents a strong sentiment among traders. The development on the options��� side indicates that Nifty may be poised for a sustained rise, given the heavy average build-up of 22.4 lakh shares in November puts of 4900-5000 strikes.

If Nifty manages to move past a range of 5030-5060, the index may be on its path to rise as high as 5250 before a significant pull-back sets in. But for such a development, Nifty should not slip below the supports at 4940-4920.

STOCKS F&O
Sterlite Industries closed below a 17-month high it made in mid-October 2009. The intra-day rise was extended, as the stock managed to move past Rs 821 and the positive cross over between 5- and 20-DMA took place. It seems to be set for a rise towards Rs 910, if it manages to breach Rs 860 and holds above its support at Rs 823.