A non-trend day was followed by a strong up move after consolidation in the initial balance (IB) range (5,260-5,294) established by floor traders. The Nifty, all the same, faced strong resistance above 5,330 and settled at 5,320 on profit booking at the higher level. The market is expected to consolidate around the current level and if it breaks Wednesday’s high of 5,337, strong resistance is seen at 5,380. Strong support is expected to come around 5,260-5,295, the trading volume in IB range suggests.
We had indicated a non-trend day is often a signal to a new vertical move. The Nifty moved up sharply after consolidating around 5,290, but faced strong resistance above 5,330. The trade summary matrix, or data, on indicative buy-sell bids by traders hints at buy-side trades indicating short covering.
The market saw buying range extension as the Nifty rallies above IB range. Importantly, the range extension occurred above Wednesday’s value area and, hence, it was responsive buying initiated by other time-frame traders.
It was also a strong buy signal. Moreover, more than 70 per cent volume above Wednesday’s upper band of value area (5,300) indicates short covering from bears when the Nifty June futures started trading convincingly above 5,300. The buy-side trade in IB range and in the value area (5,286-5,322) also point out short covering from bears.
The Nifty June futures closed at a four-point discount to spot and saw unwinding of 611,700 shares in open interest through buy-side trades. The profit booking was seen above 5,322, but the volume was significantly low around 10 per cent. The point of control (PoC), the area of most traded price, saw 32 per cent volume mostly through buy-side trade. The 16 per cent TPOs above the PoC also signal buying activity from bears.
The June futures of Reliance Industries closed on strong note on short covering and fresh long build-up above 860. The June futures closed at 870 with 30 per cent volume above the upper band of value area (845-860).
The 28 per cent TPOs counts above PoC also indicate buying activity. The volume-based surge is expected to take the RIL around 882 and the price-based resistance is seen around 890.
