A Doji pattern at the end of the session and entry of other time-frame traders on Friday pushed the Nifty above the three-month high at 5,912.
Friday’s market profile had signalled initiative buying, as the Nifty traded within the previous session’s (Thursday) value area. Such trading is seen as a result of other time-frame traders, who are prepared to initiate something new when the market is not really presenting them any advantage. The Nifty today rose to a new three-month high, as time-frame traders had enough conviction in their view of such a up-move.
Technically, a Doji after a strong up-day signals a balance between buyers and sellers. It signals a potential change in direction and start of a new phase of the up trend. The trade summary matrix (TSM) data showed sell-side trades in the initial balance range – the first two TPO time periods of 30 minutes each – and change of hands thereafter. The short covering was visible when the Nifty started trading convincingly above 5,900. The Nifty April futures closed at a 31-point premium and added open interest of 2.35 million shares, which indicates build-up of long positions. The market signalled active buyers, as the TPO counts below the point of control (PoC) were higher.
The market picture chart suggests price based rally in the Nifty April futures at around 6,017. Initially, the Nifty may face some selling pressure around 5,987. The trading volume in the IB range (5,860-5,880) was significantly lower at 23 per cent and that range may act as a support level for the Nifty. The value area (5,865-5,935) saw change of hands above 5,910, which hints at short covering at the higher levels. The spot Nifty could get support at 5,857 and an upside resistance is seen at 5,942. The Bank Nifty is expected to move up around 12,035 and get strong support at 11,545.
The open interest build-up at 5,800-5,900 strike put options suggests that participants are expecting the market to remain buoyant and an extension of support level from 5,800 to 5,880. The 6,000-sttiler call options added around 0.7 million shares, through sell-side trades, which hints at the resistance level of the Nifty.