The market closed in the red on concerns over global economic growth and the rate hike by RBI. The Nifty futures, however, closed at 5,480, which is the crucial level for the market for an immediate vertical run. The derivative participants are also reluctant sellers below 5,460 and, hence, that could be the potential for an upside breakout in the near future. Strong resistance for the Nifty March futures remains at 5,555-5,580 while crucial support exists at 5,400.
The trade summary matrix (TSM) indicates change of hands, but a strong buy signal below 5,480. The selling pressure was intense above 5,480. The initial balance range (5,480-5,512), the first two TPO time periods, saw 50 per cent volume and 58 per cent TPO counts, which indicate price-based selling at those levels. The value area (5,470-5,510) too saw a change of hands, but an equal percentage of volume and TPOs, which indicates an exit from long positions and a build-up of fresh short positions.
The Nifty opened in the red and within the value area and after moving up to the day’s high of 5,529, it closed at 5,480. Though these are signs of a balanced market, the close below the IB range indicates a weak undercurrent. The Point-of-Control (PoC), price where most activity occurred, saw multiple distribution. The TPO counts above the PoC (5,490-96) were higher than the lower portion of PoC, suggesting strong selling activity and a net selling day.
The Nifty futures are expected to witness selling pressure and lower-end support is expected to come around 5,415-5,400, the market picture chart suggests. Strong resistance is expected to come around 5,527, the TPO data indicate. The spot Nifty is likely to see a volume-based upside around 5,520 and support around 5,400. The Bank Nifty is expected to face strong resistance around 10,925 and is likely to get support around 10,785. Options traders booked profits in the 5,400-5,500-strike call options in the morning session and built up fresh short positions thereafter. The 5,500-strike call options added 1.05 million shares in open interest through sell-side trades, indicating a resistance level for the market going ahead. Short-covering was seen in the 5,400-5,500-strike put options as the participants expect the Nifty to trade below the 5,500 level in the near future.