The Nifty recovered sharply in the last 30 minutes of trade on Friday from the time-priced opportunities (TPO) -based low of 5,940 to close above the crucial support level of 6,000. The sharp pull-back rally in ICICI Bank and Reliance Industries (RIL) led the recovery in the Nifty.
ICICI Bank gained 9.4 per cent, while RIL went up around two per cent from intra-day lows. Among key stocks futures, Tata Motors and State Bank of India recovered around a per cent each from their day’s lows, but still closed in the red on profit-booking at higher levels.
The Nifty November futures is now poised to revisit the 6,100-level with a volume-based target of 6,140 from a low of 5,970, based on the sharp volume-driven pullback in the last 30 minutes of trade. The intra-day market picture chart indicates TPO-based upmoves at 6,067 and volume-based resistance at 6,088. On the weekly market picture chart, the Nifty is expected to show significant weakness with a TPO-based price level of 5,920 and volume-based support at 5,900.
A significant build-up was seen in the 6,100-6,300 call options, mostly through a change of hands. This indicates participants expect a fresh rally in the equity market. The 6,500-strike call options added 1.58 million shares at a nominal premium of Rs 8 a share. In addition, the build-up of open interest (OI) in the out-of-the-money call options suggests participants also expect good news from both RBI as well as the US Federal Reserve and a bull rally in November. However, a few were very cautious and built up buy-side positions in the 5,500-5,600s-strike put options.
On Friday, the Nifty November futures had recovered from the day’s low of 5,966 to close at 6,040 on short-covering at lower levels. The OI in futures saw an addition of 1.44 million shares during intraday trade, but declined by 61,600 shares by close of trade. This hints at short-covering from bears.
The market is expected to open on a positive note on Monday as the futures closed in the upper band of the initial balance range (5,990-6,050) established by liquidity suppliers.