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After a sharp recovery of more than 250 points from the low during the last week, Nifty witnessed profit-booking at higher levels to close with a loss of 33 points at 12,054 on December 16.

In the derivatives’ segment, we have seen long build-up in the Nifty Futures’ during the last week. FIIs also created fresh shorts in the Index Futures’ segment.

Among the options, we have seen put writing at 11,900-12,000 strike prices, indicating that 11,850-11,900 may act as strong support, going forward.

On the week ended December 6, Nifty formed bearish engulfing pattern candlestick pattern on the weekly charts. The high of that candle is placed at 11,138, which would act as an immediate resistance going forward.

Considering the technical and derivatives evidence discussed above, we believe that 11,850-11,900 has emerged as strong support and unless that level is breached, the trend for the market would be considered bullish.

Therefore, our advice would be to accumulate longs in Nifty with the stop loss of 11,850. Immediate resistance is seen in the range of 12,100-12,150. Any close above 12,150 could push Nifty towards the target of 12,400.