The Nifty May futures faced resistance above 5,520 and declined sharply thereafter on account of weak fourth quarter results from State Bank of India (SBI) and volume-based selling in Reliance Industries. The May futures tested the support of 5,445, but settled at 5,450, after significant buying at the day’s low of 5,422. We had indicated in this column the Nifty might face resistance in the price range of 5,500-5,520 and a possible volume-based decline around 5,445. The price projection, using time price opportunities (TPOs), hints at an index level of 5,541, while the volume picture suggests a sub-5,400 level, at 5,375.
The market undercurrent remains weak, but volume-based recovery from the day’s low and the close at 5,450 hints at a minor recovery tomorrow. However, the upsurge is likely to be modest, around 5,480. The trade summary matrix, or data on indicative buy-sell bids by traders, hints at buy-side trades with sell-side volume from top trades. This suggests some short covering has been done in the falling market. The floor traders were sellers in the initial balance range (5,486-5,522), and hence, strong resistance above those levels is likely, going ahead. The value area (5,442-5,494) saw some buying below 5,463, mostly in the form of short covering.
The Nifty May futures closed at an 8-point premium to spot and saw 181,800 shares added in open interest, indicating long build-up at the lower level. The market picture chart hints an immediate support at 5,403 and around 5,375, thereafter. The Bank Nifty May futures may face resistance above 10,800 and volume-based support is seen below 10,300.
As expected, the May futures of SBI closed on a weak note after an extremely poor fourth quarter show. The price-based selling was seen in the IB range (2,560-2,602). The futures also closed below the lower end of the value area (2,420-2,570), with 31 per cent volume changing hands below the lower band. This indicates fresh downside for the stock, with volume-based support coming around 2,185, the MKTP chart suggests.
Options traders covered short positions in the 5,300-5,600-strike put options and built up fresh short at the 5,400-strike call options. This means there is a strong possibility the Nifty may move down below 5,400 in the near future.