The Nifty May futures settled at 5,555, a Doji pattern on a closing basis as participants covered short positions at the lower levels. The market profile indicates responsive selling at the higher levels and initiative buying at the lower level from the other time-frame traders. The futures opened at 5,576 or above the value area (5,524-5,568), but sellers immediately entered the market and took the Nifty to the day’s low at 5,501. The futures regained the day’s high level on account of initiative buying, but settled at 5,555 on profit booking during the last 30-minute session.
The initial balance (IB) range saw a significantly higher volume, 72 per cent, mostly through a change of hands. The top traders were buyers in the IB range. The value area (5,524-5,568) saw 57 per cent volume through a change of hands. The change of hands indicates the equilibrium of buyers and sellers. The futures closed above the upper band of the previous value area, indicating consolidation above 5,550. This type of market profile is known as the neutral day, in which there is not much difference in the perception of value between buyers and sellers.
The Nifty May futures closed at an 11-point premium to spot and shed 2.14 million shares on an intra-day basis. The market picture chart, which provides an insight into where the fair value is and who is controlling the markets, hints at a price-based upside of 5,602. However, volume-based selling pressure is expected to come around 5,632. Spot Nifty may face resistance above 5,597 and is expected to get strong support below 5,532. The May futures of Bank Nifty are expected to face resistance above 11,225 and volume-based support is in place at 11,835.
Options traders are expecting the Nifty to get support around 5,500 as the same strike put options hold the highest open interest among put options. The put/call ratio of 1.70:1 at 5,500-strike also hints at more put writing at that level. The open interest build-up at the 5,600 and 5,700-strike call options hints at strong resistance for the market going ahead. However, there is a possibility of the futures moving above the 5,600 level going ahead as the trade summary matrix data hint at short covering in the 5,600-strike call option and a fresh short build-up in the 5,600-strike put options.