The Nifty is likely to open on a positive note on Monday, as the SGX Nifty closed convincingly above the 5,100 level on the OTC exchange on Friday on strong global cues. However, a Doji pattern formed during the last couple of trading sessions suggests that the traders are indecisive at current levels. The trading pattern in the last couple of days in the Nifty futures suggests that the index may face strong resistance above 5,100 with strong support seen around 5,060.
The market picture (MKTP) chart indicates that the Nifty is expected to get support at the 5,070 level. The MKTP chart provided by Bloomberg allows viewing of trading activity at each price level which allows fair value discovery. The low volume areas in the MKTP chart suggest potential future support or resistance levels. On Friday, the Nifty closed below their low volumes area, which was formed above the 5,100 level. This may be a potential resistance level in the future.
The time-price opportunity (TPO) chart indicates that the index is likely to go up to the 5,135 level in near future. The basic theory is that the market will have important reactions near the highest count TPO areas, where the market is fairly valued. The TPO area, where most of the bulls and bears agree on a price, was at 5,105-5,110 levels compared to 5,060-5,065 levels on Thursday. Interestingly, the 5,105-5110 range was a low volume area and the 5,060-5,065 range a high volume area, indicating resistance and support levels for the Nifty.
The price projection using the TPO chart suggests that Bharti Airtel, ICICI Bank and State Bank of India are expected to move up by Rs 10-20 per share from their Friday levels. Bharti Airtel may go up to Rs 306.25 from Rs 298, ICICI Bank to Rs 917.50 from Rs 903.50 and State Bank to Rs 2,087 from Rs 2,053.25. Reliance Industries is expected to fall below Rs 1,000 from Rs 1,013.25.
Options traders were seen covering short positions at the 5,000 strike put on expectation of a mild pullback going ahead. The 5,100 put added 843,750 million shares in open interest, mostly through buy-side trades which indicates that the participants are hedging long positions at the 5,100 level. Profit-booking at the 4,900 and 5,000 strikes calls and fresh build-up of open interest at the 5,100 strike call suggest that the traders expect a weak market going ahead and strong upside resistance.