As expected, the Nifty October futures failed to breach strong resistance at 4,900, and closed below 4,800 on account of selling pressure in bank stocks. State Bank of India (SBI) tumbled 4.2 per cent after Moody’s Investors Service cut the financial strength rating for the bank. ICICI Bank shed 4.2 per cent on account of unwinding of long positions. SBI is expected to fall to 1,667 and ICICI Bank around 761, based on market picture chart (MKTP). Reliance Industries, which closed on a weak note, is likely to move down around 755, and may faced resistance at 795.
The Nifty opened on a weak note and after witnessing lack of interest from floor traders, tried to flirt the 4,900 mark as other time-frame traders turned buyers. Moody’s rating downgrade for SBI changed the market sentiment dramatically, as the Nifty went down 160 points to 4,725 from day’s high level of 4,885.
The market profile suggested selling from the other time-frame trader and institutions such as the October futures broke down below the initial balance (IB) range (4,818-4,864) and closed below that range. Nevertheless, selling range extension is hinting at fresh weakness in the market.
Global cues remained an important factor for the market momentum and hence, it is very difficult to predict the upper or lower price range on the basis of the MKTP. However, poor volume in IB range and change of hands in value area above 4,818 suggested resistance for the October futures above 4,818. However, if the global market remained in the bear grip, the volume based selling on Wednesday can take the Nifty around 4,667, the MKTP chart suggested. On a normal day, the Nifty could move up around 4,808-4,827.
The October futures settled at a marginal premium to spot and added 1.03 million shares, mostly through buy-side trade below 4,780. The 70 per cent TPO counts below point of control (PoC-4,848) net selling from other time-frame traders.
However, 35 per cent buy-side volume below 4,780 hints at strong consolidation below 4,780 going ahead. Options traders covered short positions in 4,900-5,000-strike put and built up fresh short in the 4,800-4,900-strike strike call options. The participants added 2.05 million shares in 4,300-strike put to protect downside.