The market fared along expected lines, supported by strong global cues, a mad rush to buy banking sector stocks and short-covering in the Nifty as well as key stocks futures. At close of day, the undercurrent was extremely positive and that is expected to take the Nifty past the 5,660-mark early next week. According to trading data in the Nifty September futures, support level is moving up to around 5,600 and strong resistance can come in above 5,700.
The Nifty September futures closed at a discount to spot on stronger volume growth above 5,600. The futures added 1.12 million shares in open interest (OI), mostly through buy-side trades above 5,606, which indicates a long build-up. The trading data shows there is short-covering across all levels. Even the market picture chart depicts multiple distribution of time-price opportunities (TPOs).
The Nifty is expected to trade mostly above 5,600 next week, as around 90 per cent of trading volume and TPOs were above the upper end of the value area (5,578-5,606) of Wednesday. The bulls clearly showcased their power in Thursday's session, with trading volume dominated by buy-side trades, except for the last 30-minute session. This momentum is expected to continue till the Nifty faces strong resistance.
The options traders covered short positions in the 5,500-5,600-strike calls and built up some long positions in the 5,700-strike call. The 5,600-strike put added significant OI in the last couple of trading sessions in a rising market, which throws up 5,600 as the new support level. Fresh additions in the OI in the 5,700-strike put suggest that the bulls are in dominance and that the Nifty may achieve a level of 5,700-plus in the near future.
In stock futures, as indicated in this column yesterday, State Bank of India (SBI) closed at Rs 2,957. The September futures of SBI rose 2.8 per cent and added 11 per cent shares in OI, indicating a build-up of long positions. If Thursday's buying pattern in SBI is taken into account, a fresh upside can be expected with a TPO-based target of Rs 2,995 and a volume-based surge expected around Rs 3,005.
Among other stocks futures, HDFC Bank is expected to go up to around Rs 2,260 from the current level of Rs 2,238. But Reliance Industries and Bharti Airtel are expected to see some listless movement.