An over 300-point correction in three trading sessions from the intraday high of 6,318 seems to be over with the Nifty October futures getting crucial support at 6,107. The futures closed significantly higher at 6,133 after coming close to the support of 6,000 on short-covering and lower-level buying in technology, automobile and capital goods stocks. The volume-based rally in the last 120 minutes is expected to take October futures around 6,207, Bloomberg’s intra-day volume picture chart suggests.
The participants lifted the market from the day’s low to the day’s high on the back of 40 per cent volume in the last four time-price opportunities (TPOs) periods of 30 minutes each. The futures also closed at 46 points premium to the spot, adding 730,400 shares in open interest. Even so, the Nifty looks weak on the intra-day market picture chart with volume and TPO-based downside expected at 5,925-5,945. The significantly higher (66 per cent) trades below the mid-point level of 6,072 hint at selling pressure at higher levels.
The Nifty October futures saw sell trades in the value area as well as the initial balance range created by the liquidity providers in the first two TPO time periods. The value area, mostly known as acceptance of the price range by short-term liquidity providers, saw buy trades from top traders and profit-booking by retailers. The only positive was close of October futures above the upper band of the value area (6,020-6,090) with 25 per cent volume.
A significant build-up was observed in 6,000 and 6,100 call options, and the 6,100 put options. The 6,200-strike calls saw unwinding of 625,050 shares in open interest, mostly through sell trades. The significant unwinding of open interest was seen in the 6,200-strike puts (782,250 shares) and the 6,300-strike puts (1.08 million shares). The 6,000-strike puts still have the highest open interest and there was no unwinding here. So, the market expects the Nifty to face resistance above 6,200 and find support around 6,000.
Among stock futures, HCL Technologies, TCS, Larsen & Toubro, Tata Motors and Reliance Industries ended the day on a high note.
Their stock futures closed above the upper band of the value areas with over 30-35 per cent volume. The volume picture chart indicates a price level of Rs 1,037 for TCS, Rs 2,122 for L&T, Rs 1,227 for Tata Motors and Rs 1,100 for Reliance Industries.
