Responsive selling on Tuesday was aptly followed by initiative buying around 5,050 on Wednesday from other timeframe traders, after witnessing a strong opening of European markets. Earlier, the market opened above 5,000 and staged a strong consolidation around 5,000-5,055, after Infosys reported a profit that exceeded estimates and raised revenue guidance for the financial year 2012. The trading volume in the Nifty October futures increased to 25.91 million shares from an average of 20 million shares in the last four trading sessions, indicating short-covering from bears. However, while the futures settled at 5,113, the volume weighted average price stood at 5,050, which suggested short-covering below 5,050.
The market undercurrent has changed after Wednesday's initiative buying and fresh long build-up in the futures and key stock futures. The trading data points at a strong opening on Thursday, if the global cues remain positive. Nevertheless, price-based buying from top trader above 5,074 would lead to a fresh upside around 5,137, the market picture (MKTP) chart sourced from Bloomberg suggested. However, if the European markets put up a strong show in the next couple of days, the volume-driven rally may get extended around 5,231. The first support is expected to come around 5,048, which is also the upper band of the initial balance range (5,016-5,048). Expect strong support at 4,972.
The key players in the index, Infosys, Reliance Industries, ICICI Bank and State Bank of India, are expected to help the Nifty achieve those levels. These heavyweights had settled around the day's high levels, as participants covered short positions initially and build-up fresh long positions thereafter. The MKTP chart suggested a strong upside in Infosys around 2,722 and a lower-end support at 2,602. RIL is expected to move up around 875, ICICI Bank around 888.50 and SBI around 1,962.
By closing above 5,100, the futures successfully managed to move past crucial resistance of 5050. Due to this, it can now move up further and target 5,200 on upsides. The decline in the open interest (OI) in the 5,000-5,200-strike call options through buy-side trades from top traders suggested short-covering on expectation of a strong rally. The OI build-up of 1.20 million shares in 5,100-strike put options suggests a strong opening on Thursday.
