As expected, the Nifty September futures staged a significant pullback above 4,900 as European leaders discussed plans to ease the region’s debt crisis. The top contributors to the index, Reliance Industries, Infosys, ICICI Bank and State Bank of India, rose on short covering. We had indicated in this column yesterday that the September futures would crack the 4,900 mark if global markets close in the green. The Nifty consolidated around 4,930 during the pre-noon session after opening at 4,910. The index broke the resistance of 4,930 to move up to the day’s high of 4,990 on short covering and strong global cues.
Trading in September futures hinted at short covering from bears, when the Nifty started trading convincingly above 4,950. The September futures settled at 4,983 and the volume weighted average price (VWAP) was at 4,946, indicating profit booking at the higher levels. The market is trading for the expiry of the September series, and hence, it would be difficult to project price levels. However, the September futures could see significant price based upside around 5,025 and volume-based support at 4,895. Since our market is glued to global cues, strong closing at the European and US markets has been mandatory to keep the momentum up.
Trading in 5,000-strike put options seems to be favouring the bulls as the trade summary matrix (TSM) data in 5,000-strike put showed sell-side bias, indicating short build-up by derivative participants. The traders also covered short positions in 5,000-strike call options initially, and build-up fresh long positions as they expected the Nifty to move above 5,000 tomorrow. TSM data for the September futures suggested short covering in the initial balance (IB) range of 4,905-4,934. Nevertheless, a 34 per cent TPO count above the Point of Control (PoC-4,966) indicated buy-side bias. The rollover in the Nifty October futures rose by 3.07 million to 10.92 million shares through buy-side trade indicating long build-up.
The day’s top gainers, Reliance Industries, Infosys, ICICI Bank and State Bank, are expected to move up further tomorrow. Reliance is expected to move up around 805-819, with the support at 770. Infosys may get support at 2,342, with an upside resistance around 2,497. ICICI Bank is expected to cross the 900 mark tomorrow and would get support at 869. State Bank would go up around 2032 and get support at 1,985. The price projections are based on the market picture chart sourced from Bloomberg.