The Nifty faced strong resistance at the time-price opportunity (TPO) levels of 5,135-5,145 and closed at 5,124 on lack of buying at higher levels. The index may face strong resistance around 5,170 on account of low volumes at higher levels. The value area was also narrower than the previous day, indicating more tired buyers at higher levels. The TPO support, where most bulls and bears agree on the price, is seen at 5,097, as the Nifty closed above its low volume area for the day.
The derivatives participants were indecisive as trading volumes on the futures and options (F&O) segment declined by almost Rs 10,000 crore. The volume in Nifty March futures declined by over 3 million shares as the index moved in a narrow range of 20 points after opening at 5,130 levels. The bears seemed to have built short positions today as futures closed at a discount and added 0.55 million shares in open interest. Bloomberg data suggested more sell-side trades when the index was trading above 5,131.
Short-covering was seen at 4,900 and 5,000 calls as participants expected the index to stay above 5,100 in the near future. Bloomberg data suggest change of hands at the 5,100-strike call and long build-up at the 5,200-strike call options.
The support for the Nifty is getting stronger at 5,000 as this strike put added 1.05 million shares in open interest through sell-side trades. The support is expected to move even higher at 5,100, or around 5,200, as 5,100 and 5,200 puts together added 1.77 million shares through sell-side trades.
More price action is expected in State Bank of India as its March futures added 0.55 million shares through buy-side trades. The value area, where the volume is higher than the previous day, suggests the stock may move up further at around Rs 2,180 in the near future. Traders seem to be tired of buying ICICI Bank as its March futures formed a narrow body at higher levels, with low volumes indicating more tired buyers.
