After moving between support and resistance levels, the Nifty closed in a Doji pattern on Thursday, as bulls and bears looked comfortable holding on to their positions till the expiry of this month’s series, which is five days away.
Overall volumes in the derivatives segment dipped 20 per cent, while they fell by a significant 31 per cent in Nifty December futures, as the trading band in the value area and the initial balance (IB) range was squeezed to 16-20 points from 40 points on Wednesday.
The trade summary matrix (TSM) indicates buy trade in the value area (5,988-6004) and the IB range (5,992-6,012) and suggests profit-booking above the upper band of the value area. No wonder open interest in December futures declined 2.39 million shares over the intra-day level, even as trading volumes fell by five million shares.
The value area saw more than one point-of-control, which indicates the market has spent most of the time at different index levels.
Most of the volume in Nifty futures was below 6,014, with only 10 per cent trades changing hands above 6,004. Around 15 per cent trades were initiated below 5,988, suggests the market picture chart. This hints at a narrow band movement on Friday, with profit-booking above 6,000 and support below 5,980. The market picture chart projects a time-price opportunities (TPO)-based resistance at 6,014 and volume-based support at 5,977. The spot Nifty may see support and resistance at 5,957 and 6,010, respectively.
The undercurrent remains positive, as the January series, which closed at a 26-point premium to December, added 1.39 million shares in open interest through buy trades. The trading volume in Nifty put options indicates the index may not trade below 5,950 in the near term or may consolidate around 5,970-6,015. The build-up of open interest in call options, however, hints at a strong resistance above 6,060-6,100.
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Put option participants covered short positions in the 5,700-5,800-strike put on expectation of a narrow band movement. There was significant addition of open interest in the 5,900-strike call as well as put options, while the 5,800-strike put continued to hold the highest open interest among all put options. This signals that major support continues at 5,800, with a few bulls expecting the index not to trade below 5,950 in the near future. Nevertheless, major resistance remains above 6,060, the open interest in that options suggests.
Among stock futures, Sun Pharma and HCL Technologies showed considerable strength and closed above the value area on short-covering.
The TPO and volume data hint at a price level of Rs 464 for Sun Pharma, as futures closed on a high note, shedding 32 per cent open interest in the December series. HCL Technologies may see a price level of Rs 468 going ahead.