The Nifty moved in a tight range, maintained support at 5,100 and closed in a Doji pattern, indicating indecisiveness at current levels. The current sideways action will cool off the overbought oscillators for the index to rally. The futures and options (F&O) participants expect strong resistance above 5,150 and so have booked profit in Nifty March futures above 5,135, Bloomberg data suggest. The resistance zone of 5,180 is proving difficult to break but the trend has remained positive.
The intra-day trading chart indicated negligible volume (9 per cent) below 5,112, which suggested that traders were not willing to sell the Nifty futures below 5,110. However, the supply zone continues to be above 5,131 (35.4 per cent volume), indicating lack of long build-up at higher levels. Buyers and sellers were active in the value area (5,112-5,132), where 70 per cent time-price opportunity (TPO) and volumes occur. The support is at 5,080-5,100, below which the short-term correction may aggravate.
The 5,100 and 5,200 calls saw profit-booking at a higher premium and short-covering at a lower premium as participants expected that the Nifty was unlikely to break out of the trading range of 5,100-5,150 in the near future. Put options traders sold the 5,100-strike put on expectation of strong support above 5,100. The 5,000-strike put added 0.57 million shares in open interest through buy-side trades, indicating hedging of long positions.
As expected, Infosys Technologies closed above 2,700 on short-covering and fresh long build-up. The TPO chart indicates Infosys will move around Rs 2,710. The projected price using volumes is around Rs 2,767. Reliance Industries remained firm due to short-covering. According to TPO and volume indicators, the stock can move up around Rs 1,042.
Bloomberg’s TPO and volume charts indicate that if a security closes above the high-volume area, it has strong potential to move up in the next trading sessions. Infosys and Reliance closed above high-volume areas and hence have the potential to rise further.
