The Nifty January futures reached the 6,200 level, as expected, but failed to hold on and closed at the day’s low on profit-booking. Index heavyweights, such as State Bank of India, Tata Motors, Reliance Industries and ICICI Bank, also yielded to selling pressure and closed around the day’s lows.
Although the trading pattern in Nifty futures did not point at any major weakness, selling pressure at higher levels will be a major hurdle for the market to test the recent high of 6,338.
The trade summary matrix indicates buy volume in the value area (6,182-6,200) and change of hands in the initial balance (IB) range (6,194-6,207). There was short-covering below 6,182. The January futures, which closed at a 25-point premium to the spot, added 243,050 shares in open interest, despite an intraday build-up of 1.22 million shares. Futures closed at 6,181, below the lower band of the value area, with only eight per cent volumes below that level. The IB range, the first two time-price opportunities (TPO) periods, was above the mid-point level of the day, indicating a strong resistance level.
The market picture chart for the day hints at a level of 6,207 based on TPO projections. The volume picture chart suggests strong resistance above 6,223. However, volume-based sell-off in the last 60 minutes can take the Nifty around 6,155, while the TPO-based support may be around 6,172.
The volume chart shows 80 per cent volumes above the day’s close, which indicates that traders have rejected these levels. Hence, they are likely to act as potential resistance levels. If a security closes below its low-volume area, the level may prove to be a potential resistance point in the future.