Nifty likely to revisit the 5,800 level

The Nifty opened on a weak note and after testing support below 5,700, closed in the green on account of short covering. The trading pattern in the Nifty April futures suggests strong responsive buying from other time-frame traders when the floor traders were net-sellers in the initial balance range — the first two TPO time periods of 30 minutes each. The responsive buying from the other time-frame traders is expected to take the Nifty above 5,800, the market picture chart suggests.

The Nifty was up 11 points in the end, indicating a Doji pattern on the closing basis. There is no definitive or suggestive buy or sell signal from this formation. However, based on the down session followed by a Doji, we can safely say the market has paused and found some sort of a balance between buyers and sellers. To gain any real insight confirmation, we will have to wait till tomorrow’s sessions. However, any decline in the Nifty is likely to be arrested around 5,687. The market on Tuesday showed some sign of definitive trend, as the time price opportunities (TPO) counts above the point of control (PoC) were lower than the TPO count below the PoC. The TPO counts, above and below the PoC, is a good measure of trade facilitation. If there is a greater number of TPO’s below the PoC than above this price, the TPO count registered as buying activity. The trade summary matrix data suggests buy-side trades from the other time-frame traders above the PoC range (5,746-5,762).

The TSM data suggest change of hands in the first three TPO time period of 30 minutes each. However, the volume and TPOs in the IB range (5,712-5,736) was significantly lower at round 33 per cent and, hence, the other traders manage to take the Nifty above that range. The Nifty April futures closed at a 20-point premium to spot and saw unwind of 4,87,200 shares in open interest indicating short covering from bears at the higher level.

The open interest build-up in the call and put options hints at a support at 5,700 and resistance above 5,900. The Nifty is expected to revisit the 5,800 level in the near future, as the 5,800-strike call options see negligible unwinding despite a trading volume of 31.25 million shares, indicating fresh long build-up by other time frame traders.