The market maintained its Monday’s up move on the back of sustained responsive buying. Responsive buying occurs when the market opens below the value area and buyers immediately enter and take the market at the higher end of the value area. However, the market witnessed strong responsive selling after the Nifty tested the value area high and moved out. In responsive selling, sellers entered the market and auctioned price back into the value area.
The Nifty opened at 5,695, entered the value area (5,726-5,768) and after facing selling pressure at 5,788, closed at 5,754. The value area is made of 70 per cent of the price points, which is called time price opportunities (TPOs). The Nifty then traded within the value area and closed at the mid-point of the day. The basic significance of a market trading within value area is that of a balanced market. It shows buyers and sellers are equally matched and facilitating trade at mutually agreeable prices.
Overall, the time-price opportunities (TPOs) data suggest a sell-side bias and change of hands at the higher level. The participants covered short positions in the Nifty March futures in the initial balance (5,695-5,750) and strong selling above 5,750. The volume-based selling in the last 70-odd minutes of trading is expected to take the Nifty March futures in the 5,722 range, the volume picture chart suggests. The spot Nifty is expected to get volume-based support at 5,707.
The market undercurrent remained positive, but saw strong selling pressure at the higher resistance level. The time-price opportunities (TPO) count above the point of control (PoC), the area of most traded price continues to throws weak signals as the number of TPO at the upper portion of the PoC (5,745-5,750) was higher than the lower portion of PoC. The price projection using TPOs and volume picture chart suggest a target of 5,777 and support at 5,707.
The Bank Nifty moved up as expected and faced resistance above 11,700. The index closed within the value area but closed below PoC (11,603), indicating a weak undercurrent. However, support is seen around 11,450. SBI is expected to face resistance around 2,832 and get support below 2,747. ICICI Bank is likely to face resistance around 1,144 and get strong support at 1,090.