The Nifty held the 5,700 support and closed around the day’s high of 5,910 on short-covering in index and key stock futures. The index closed marginally above 5,900 while the futures settled at 5,933, the time-price opportunity (TPO)-based resistance level indicated in the market picture chart on Friday. The participants covered short positions when the index was consolidating around 5,795-5,825 during the mid-noon session, the market picture chart from Bloomberg suggested.
Nifty December futures closed at a 25-point premium to the spot without adding any open interest despite a trading volume of 26.75 million shares. A significantly higher (52.9 per cent) volume changed hands in the last two hours after the index rose almost 140 points, from 5,800 to the day’s high of 5,940. Top traders covered short positions in the initial balance range (5,855-5,890) while the value area (5,820-5,900) saw change of hands.
Nifty futures, which closed above the upper band of the value area with 26 per cent volume and 15 per cent TPOs, is hinting at continuation of recovery around 6,012 (spot) and 6,062 (futures). However, on the intra-day market picture chart, the Nifty has strong support at 5,740-5,717. The volume-based resistance is expected around 6,075, the market picture chart suggests. The build-up of open interest in call and put options indicates strong support at 5,800 and resistance above 6,000.
There was significant short-covering in call options above 5,800 on expectation of a fresh pull-back around 6,000. The open interest in the 5,800-5,900-strike call options was down by 1.50 million shares while the 6,000-strike call options added 500,000 shares in open interest through change of hands. There was short-covering in the 6,100-6,200-strike call options and fresh short build-up in the 5,800-6,000-strike put options. This clearly indicates that the market participants expect fresh recovery.
The Nifty’s bounce-back from the day’s low is likely to trigger fresh buying in key stock heavyweights that recovered sharply with the index. Reliance Industries is expected to move to around Rs 1,075-1,085 over its closing level of Rs 1,041. Tata Motors is projected to move up around Rs 1,281-1,301 while HDFC is expected to rise around Rs 713, the TPO and volume picture charts suggest.
