The Nifty July futures closed at 5,645 due to the bullish sentiment in the world market, after European leaders agreed on aid for Greece, thus easing concerns on the debt crisis.
The positive outlook for the Indian market and the decision to increase allocations in India by Sam Mahtani, director of emerging-market equities at London-based F&C Asset Management Plc, also helped the market to consolidate above 5,600. The futures settled marginally below 5,650, and, hence, the close at 5,645 is crucial to sustain Friday’s gain. A break below 5,590 can take it back to 5,530.
The futures opened on a strong note, and after consolidating around 5,570-5,590, moved up convincingly above 5,600, due to short covering from other time frame traders. It was abuying range extension as the market opened below the value area, and moved above value, as buyers responded to the price below value.
The futures saw strong consolidation around 5,630-5,640, maybe to allow bears to cover short positions. The 73 per cent volume above 5,620 suggests short covering at a higher level. It was also a net buying day, as the time price opportunity (TPO) counts above the point of control (5,636) were significantly lower at 25 per cent.
The initial balance (IB) range (5,573-5,595), the first two TPO time periods established by floor traders, accounted for 18 per cent volume and TPOs, mostly through change of hands. The value area (5,600-5,644) accounted for 68 per cent volume through buy-side bias, indicating short covering in that range.
The Nifty will move to 5,700 now, but may face resistance at 5,730. The Nifty saw strong buy-side trades below 5,640, mostly due to short covering, as open interest (OI) in futures declined by 1.04 million shares. The market picture chart hints at a volume-based upside around 5,692, and IB range support at 5,590.
The options traders were bullish, and, hence, covered short positions of over eight million shares in the 5,500-5,700 strike call options. Participants have been hedging long positions through buy-side trade in the 5,600-strike, and are also bullish as they increase OI in 5,700-strike put by 2.52 million shares through sell-side trades.
