As expected, the Nifty opened on a positive note, faced resistance above 5,137 and slipped in the red after the European markets opened weak. We had indicated in this column yesterday that the price-based upside during Wednesday’s session may be halted around 5,137, depending on how the global markets react.
Trading in the October futures suggested responsive selling as the index opened upbeat and moved strong above the previous initial balance (IB) before slipping in the red and closing below the lower band of value area. The trade summary matrix data suggested profit booking from top trade in the IB range and change of hands in the value area, indicating entry of new players.
Trading volume in the Nifty October futures declined to 21.50 million shares from 25.91 million shares on Wednesday, as participants preferred to stay idle as the Nifty failed to sustain above 5,137. The multiple point of control (PoC) in the value area (5,084-5,122) suggested failure in price discovery among buyers and sellers. Selling pressure below 5,119 in the last two hours was accompanied by 40 per cent volume hinted at bears dominance and no sign of shift into the bull trend. The market undercurrent has weakened a bit on account of this selling. The trading data points at a weak opening on Friday, if global cues remain negative.
Nevertheless, volume-based selling from 5,125 to the day’s low of 5,070 would lead to a fresh fall around 5,019, the market picture (MKTP) chart sourced from Bloomberg suggested. However, a recovery in the European markets would bring the bulls back in action and significant recovery around 5,122 thereafter. Upside resistance was seen at 5,157 and 5,171. The first support was expected to come around 5,043, which is also the upper band of Wednesday’s initial balance range (5,016-5,048). Major support is expected at 4,972.
The key players in the index recorded a mixed trend with Infosys and ICICI Bank gaining, while Reliance Industries and State Bank of India closing in the red. The MKTP chart, however, suggested weak opening for all four key players tomorrow. The fall in open interest (OI) in the 5,100-strike call options through buy-side trades suggested short-covering on the expectation of a fresh weakness. The change of hands among options participants in 5,000-strike put also hinted at a weak opening on Friday.