The Nifty May futures closed below 5,500 on account of selling from the floor trader and lack of support in the value area from price traders. We had indicated in this column that the Nifty might face resistance above the previous day’s initial balance (IB) range (above 5,515) and about the possibility of a volume-based decline around 5,480. The Nifty faced strong resistance above 5,535 and declined to a low of 5,487. The market undercurrent turned weak and hence we may see a little more correction this week.
The trade summary matrix, or data on indicative buy-sell bids by traders, hints at buy-side trades with sell-side volume from top trades. This suggests that some short covering has been done in the falling market while big traders built up short positions at the higher level. The floor traders were sellers in the initial balance range (5,510-5,537), with 42 per cent volume changing hands at those levels. So strong resistance above those levels is likely going ahead. The value area (5,410-5,520) saw some buying below 5,500, mostly in the form of short covering.
The Nifty May futures closed at an 11-point discount to spot and added 1.21 million shares in open interest, indicating short build-up from bears. It is expected to face resistance above 5,510, but any significant move upward is likely to be halted around 5,547, suggests the price projection using time-price opportunities data. The market picture chart hints at volume-based decline around 5,445 for the May futures and 5,467 for spot Nifty. The BankNifty May futures may face resistance above 10,990 and volume-based support is seen below 10,800.
The May futures of State Bank of India closed on a weak note on account of selling pressure in the IB range (2,610-2,629). The futures also closed below the lower end of the value area (2,586-2,618) with almost 33 per cent volume changing hands below the lower band of the value area. This indicates fresh down side for the stock, with volume-based support coming around 2,533, the MKTP chart suggests.
Options traders covered short positions in the 5,500-5,600-strike put options and built up fresh short at the same strike call options. This means strong resistance above 5,500. The 5,400-strike put holds the highest open interest among put options, so it would act as a support level.