The Nifty June futures saw strong consolidation within immediate resistance at 5,380 and rapid up move thereafter to settle at 5,484 on short covering. It was a perfect standard trend day. In a standard trend day prices constantly move up and there is no interest in moving it in the opposite direction. The profile is usually narrow, with no time-period containing more than five TPOs (time-price opportunity periods of 30 minutes each). The market is controlled by other time-frame traders, sidelining floor traders.
It was indicated on Wednesday that a non-trend day is often a signal to a new vertical move. The Nifty June futures have moved up sharply over 200 points in two trading sessions to settle at 5,484. The trade summary matrix, or data, for the day hints at buy-side trades indicating short covering. A trend change could be possible in the coming week. The market picture chart (MKTP) sourced from Bloomberg hints at a volume- based upside around 5,622.50 and strong support around 5,380-5,364.
The market saw buying range extension as the Nifty rallies above IB range (5,335-5,404). Importantly, the range extension has also occurred above value area and, hence, it was responsive buying initiated by other time-frame traders. It is difficult to project new target for the Nifty on account of buyers/sellers equilibrium at 5,460. The market has to hold this level for an upside target of 5,531 and 5,543 thereafter. Any violation below 5,460 can take the Nifty around 5,400 and 5,463 thereafter.
The Nifty June futures closed 15-points premium to spot and saw unwinding of 2.39 million shares in open interest (OI) through buy-side trades. On intra-day basis, an unwinding was significantly higher at five million shares. The profit booking was seen above 5,460. The July futures added two million shares in OI through buy-side trades which hint at bullish undercurrents. The trading in the Nifty options saw significant short covering in the 5,300-5,500-strike call options and fresh short building same strikes put options. This also signals a major fight between bulls and bears in the coming sessions.