The Nifty September futures almost achieved the 6,050-level during Tuesday's session on strong volumes and short-covering at lower levels. We had indicated in this column in our Sunday edition that the Nifty is likely to cross the 6,000-mark this week and may achieve a volume-driven target of 6,050.
The rally is now at the crucial level of 6,000, and trading volume in the Nifty September futures indicates strong resistance above 6,050 with crucial support at 5,960. Strong sell-side trades from top traders indicate a continuation of profit-booking during Wednesday’s session. The September futures moved in narrow band of 5,990-6,025 after falling to an intraday low of 5,972. Bears covered their short positions when the index slipped below 6,005. However, the profit-booking that took place above 6,025 brought the index down to around 6,000 from an intraday high of 6,046.
The participants also sold futures in the price range created by liquidity providers in the first two time-price opportunity (TPO) time periods. The point-of-control (PoC) – the price level where the market spends the most time trading – also witnessed sell-side trades.
The Nifty September futures, however, closed at a marginal premium to spot and shed 2.35 million shares in open interest (OI), mostly through sell-side trades, which shows there was some profit-booking from bulls. Profit-booking was also seen in the 5,900-6,000-strike call options as participants expect limited upside for the Nifty from current levels.
Participants also bought 6,100-strike calls, mostly to hedge their short positions in the Nifty futures. The increase in OI of 2.06 million shares in the 6,000-strike put hints at a new support level for the index above 6,050.
Among stocks futures, Infosys, L&T and TCS are expected to show further gains on Wednesday. SBI and RIL closed on a weak note. The volume-based surge in Infosys is likely to continue on Wednesday with data on the basis of TPOs hinting at a price level of Rs 3,100.
L&T is expected to be volatile as there was volume-based selling in the last one hour and may see a price correction around Rs 2,025. The TPO data projects a price level of Rs 2,090. TCS may see a price level of Rs 994, based on the strong 54 per cent volume in the last hour of trade.