For the first time in four days, the Nifty closed on a positive note as investors bought shares in the cash market and covered short-position in the derivative segment to celebrate strong global cues. It traded within the value area for most part of the day, indicating balance market. Compared to some previous sessions, time-price opportunities (TPOs) and volumes dropped considerably as buyers and sellers were equally matched and facilitated trade at mutually agreeable prices.
Derivative participants sold shares in the initial balance (IB) range (5,387-5,408). However, that did not impact the positive sentiment as the volume in the IB range dropped to 20 per cent from around 99 per cent yesterday. There was significant responsive buying in the value area (5,400-5,440). Responsive trading occurs when the market opens within the value area and makes an attempt to trade below the same. Buyers entered the market and lifted back prices into the value area.
The market undercurrent remained positive as the Nifty rallied above the IB range. It also saw significant buying (63 per cent volume) above yesterday’s value area (5,415). The TPO count above the point of control (5,436-38) — the area of the most traded price — dropped to 20 per cent from 40-45 per cent in the past few sessions, indicating a net buying day. The trade summary matrix (TSM) data indicate buying above 5,408. The Nifty March futures saw unwinding of around 2 million shares in open interest from the intra-day level, indicating short covering and fresh long build up.
The price projection using TPOs and volume picture chart suggests target of 5,480 and support at 5,380. The spot Nifty is likely to move up around 5,467 while the lower-end support is expected around 5,350. The Bank Nifty is expected to face strong resistance around 10,920 and support around 10,750. State Bank of India is expected to move up around 2,655 and get support at 2,619. ICICI Bank is likely to move up around 1,019 and get strong support at 1,000.
Options traders covered short positions in the 5,500-strike call options and built fresh short positions in the 5,400-strike put options. Going ahead, we may see some significant upside from the current level.