The Nifty closed near the day’s high on short-covering in the last 30 minutes of trade, despite a weak opening for the European markets. Technology stocks led the rally with TCS, Infosys Technologies, Wipro and HCL Technologies making the biggest gains among index components.
The Nifty futures closed at a marginal discount to spot and added a million shares in open interest (OI), despite a trading volume of 15.59 million shares. The market picture chart shows short-covering by traders at higher levels, indicating a rise in OI, mostly on account of a long build-up.
The fag-end trading in the Nifty futures, especially in the last 30-minute session, signals a breakout at 5,480 and a smooth-sailing above 5,500 thereafter. Strong support for the Nifty now moves up from 5,300 to 5,400. However, an intraday chart does not show any bullish indication as the midpoint for the day was above the point of control — the price area where most of the trading in the market was executed. This indicates that participants may not lend support at higher level and we may see the Nifty pullback below the 5,450 level.
The unwinding in the 5,400-strike call options and build up of over 1.20 million shares in OI in the 5,400-strike put options suggest the Nifty may get strong support at this level. A price projection on the basis of time-priced opportunity (TPO) and volume data also indicates support at around 5,400. However, significant additions in the 5,500- and 5,600-strike call options in the last couple of sessions indicate a breakout above 5,480, targeting the 5,600-level in the near future.
Among stocks futures, ICICI Bank, Infosys Technologies and TCS moved up strongly on a long build-up. The August futures of ICICI Bank moved in a narrow range and closed at Rs 955.60, adding 575,500 shares in OI, which translates into a long build-up. The TPO remains above the initial balance, which is indicated by the first two TPO time periods of 30 minutes each. This suggests strong support for ICICI Bank at the current level with a price target of Rs 963 in the near future.
Infosys Technologies gained 3.10 per cent on a long build-up. The market picture data shows 93 per cent volume above the midpoint, mostly through buy-side trades. TPO and volume data suggest the August futures of Infosys Technology has the potential to move above Rs 2,900 level in the near future.
