The Nifty futures maintained strong support at 6,000 in the morning and moved up sharply in the afternoon session to close at 6,120 on short-covering at higher levels.
The futures rose to the day’s high of 6,152 before closing at the volume-based resistance of 6,127. We had indicated volume-based resistance at 6,127 yesterday. Going ahead, the volume picture chart is hinting at a volume-driven upside of 6,242 if the Nifty zooms past 6,165 with significantly high volumes. The intra-day time-price opportunities (TPOs) chart suggests support at 5,952.
In the short term, emerging markets will be free riders as the US launches the second round of quantitative easing (QE2) on November 2. According to Moses Harding, head (global markets group), IndusInd Bank, “With an aggressive release of QE2 by the Federal Reserve, the retest of the recent high at 6,275 for the S&P CNX Nifty and 6,318 for futures is quite possible. The immediate bias is for extension of gains into 6,125-6,200, while weakness, if any, may keep support at 5,950.”
The intra-day picture suggests short-covering from liquidity providers in the initial balance range (6,005-6,060) created by first two TPO time periods. The value area (6,040-6,125) saw change of hands among retailers and buy trades from top traders. The October futures settled at 6,135, above the volume-based resistance of 6,127, on short-covering of 921,550 shares. The November futures settled significantly higher at 6,159 and added long position of over 500,000 shares.
The 6,000-6,200-strike call options together saw unwinding of 4.31 million shares in open interest, mostly through buy trades in the rising market. The 6,300 call options saw unwinding of 383,250 shares in the rising market. There was fresh short build-up in the 6,100 put options while a few short sellers booked profit in the 6,200 put options. This clearly suggests the bulls are in complete command.
Among stock futures, Reliance Industries (RIL) and State Bank of India (SBI) closed on a bullish note on short-covering at higher levels. The October futures of RIL closed at Rs 1,086 on account of short-covering of 1.15 million shares. The futures is expected to move up around Rs 1,125, the volume picture data suggests. SBI closed at Rs 3,217 and is expected to move up around Rs 3,295.
