The Nifty rally is likely to mature around 6,010 and an upside breakout is possible only if the index closes above 6,060, the trading pattern in index futures suggests.
There are no strong cues for a directional break-out yet, says Moses Harding, head, global markets group, IndusInd Bank. The trading pattern in Nifty futures and key stock futures did not throw up a trend on a day when all trading activity fell within a small price range.
The trading volume in December futures dropped significantly by over 10 million shares, which indicates lack of interest from day traders. Nifty December futures was trapped in a narrow band in the value area (5,920-5,955), where 55 per cent volume changed hands. The initial balance range (5,906-5,938) was compressed in the 25-point range with 34 per cent volume indicating significant support at that level from liquidity providers.
Top traders were in the buy mode in the initial balance range and booked profit in the value area, the trade summery matrix (TSM) suggested. The December futures closed at a 16-point premium to the spot while only 109,700 shares were added in open interest, mostly through sell-side trades, the TSM data suggested.
The Nifty is expected to move in a narrow band tomorrow based on price projection using time-price opportunities (TPOs). The TPO projection is hinting at an index level of 5,970, also the day’s high value. The volume picture chart, however, indicates the Nifty may face strong resistance above 6,010. The build-up of open interest in call and put options is hinting at support at 5,800 and resistance above 6,000.
There was a significant unwinding of long positions in the 5,800-5,900-strike call options through sell trades, according to the TSM data. The 6,000-strike call options added 281,650 shares in open interest through change of hands. There was change of hands in the 6,100-6,200-strike call options, which clearly indicates that the market participants expect strong resistance above 6,000.
Key stock futures such as Reliance Industries (RIL), Larsen & Toubro (L&T), State Bank of India (SBI) and Tata Motors (TTMT) are expected show an upside movement. The December futures of RIL is expected to move up around Rs 1,070 on strong volume in the value area and the day’s mid-point level of Rs 1,051. TTMT is projected to move up around Rs 1,327, L&T around Rs 2,022 and SBI around Rs 2,847, the market picture chart suggests.