As expected, the Nifty futures faced resistance at 6,060 on profit-booking and closed at the day’s low level due to lack of support. The trade summary matrix data indicate buy trades in the value area and the initial balance (IB) range. But, there was some profit-booking above 6,040. The open interest in the December series fell two million shares on an intraday basis, which indicates profit-booking by bulls and short-covering by bears. The Nifty January futures closed at a 28-point premium to December and added a million shares in open interest through buy trades.
The Nifty moved in a narrow band in the IB range (6,040-6,058), the first two time-price opportunities (TPOs) establishing liquidity providers. The market picture chart is hinting at higher-level resistance and strong support at 5,970. Intraday TPOs project a level of 6,099 while a volume-based sell-off at the day’s high of 6,063 can take the Nifty to 5,970. The January futures is likely to face volume-based resistance at 6,125 while lower-end support is seen at 6,025. The spot Nifty is expected to face resistance above 6,045 while support is seen at 5,070.
Nifty January futures continue to command a hefty premium over December, indicating long rollovers. The January series has an open interest of 7.85 million shares, lower by 1.17 million shares compared to rollovers in December futures three days before the expiry. It means the bears also expect the market to strengthen and that it may go above 6,100 in the near term. So, they are wary of going short at the current level.
The trading volume in Nifty put options signals that the support level has moved up from 5,990-6,000. The 6,000-strike call options witnessed unwinding of short positions in the morning and change of hands when the index slipped below 6,040. However, the same strike put options saw fresh short build-up in the morning session and short-covering in the post-noon session.
This clearly indicates that the Nifty may not move up or down significantly from the current level and will expire around 5,970-6,010. The open interest build-up in call options, however, hints at a strong resistance above 6,100.
Among stock futures, Sun Pharma showed considerable strength and closed above the value area on short-covering. TPO and volume data hint at a price level of Rs 487 for Sun Pharma, as futures closed on a high, shedding 271,875 shares in open interest in the December series. The January futures of Sun Pharma is expected to move to Rs 491 on account of long build-up of 311,250 shares.
