The Nifty closed in the red for the sixth consecutive day, led by banks over concerns that the rate rise may hurt economic growth and company earnings. The price-based selling was seen in the initial balance (IB) range (5,730-5,790) and also in the value area (5,718-5,756), which indicates that the floor traders as well as the other time-frame traders were unwilling to take positions at those levels and booked profits.
The IB range is the first two TPO time periods of 30 minutes each, while the value area represents equilibrium point where there are an equal number of buyers and sellers.
The Nifty May futures closed at a 24-point premium to spot and saw long build-up of around one million shares at lower levels. The floor traders booked profit at the higher levels, the trade summary matrix (TSM) data suggests. The trading volume in the Nifty May futures was considerably lower compared to the Friday’s session, which indicates that participants are waiting for the outcome of tomorrow’s credit policy before taking either side positions.
The market profile indicates selling range extension, as the Nifty breaks down below the initial balance range over selling from other time-frame traders and also floor traders. The market picture chart hints at a TPO-based resistance above 5,790 and fresh price-based decline around 5,672. The volume-based support is expected to come around 5,652. The spot Nifty may face resistance above 5,777 and is expected to get strong support below 5,627.
The Bank Nifty is expected to face strong resistance above 11,580 and lower-end support is seen at around 10,990. Among key banking stocks, State Bank of India is expected to face strong selling pressure above Rs 2,750 while the volume-based support may come around Rs 2,612. ICICI Bank is likely to see support at Rs 1,080 and resistance above Rs 1,112. The options traders expect strong resistance for the Nifty above 5,900 and hence they increased short positions in the 5,900-strike call options by 1.48 million shares. The other few traders hedged short position in the Nifty future through buying of 5,800-strike call options. The change of hands was seen in the 5,700-5,800 strike put options, as participants are expecting 5,700-5,800 trading range for the Nifty.