The entry of a new set of players in the derivatives segment in the last few days and initiative buying from other time frame traders helped the Nifty move out of the resistance to close at 5,140. The Nifty September futures settled at 5,156, the highest close in the last eight trading sessions on account of short covering from floor traders and net buying from top traders. We had indicated in this column yesterday that the September futures need to move above 5,064 to advance to 5,100.
The market profile for the day suggested a standard trend day where prices constantly move up and there was no interest in moving them in the opposite direction. The profile is usually narrow, with no time period containing more than five TPOs. The market is in the control of other timeframe participants. The market saw strong buying range extension after opening around the previous day’s close. A range extension is created as soon as price is advertised higher or lower, outside the IB range, by other time frame traders.
The range extension has given a strong buy signal because buying took place within and also above the previous day’s value area. With this, the market undercurrent has changed from neutral to bullish and that would take the Nifty above 5,200 in the near future. The Nifty is expected to test the recent high of 5,180 tomorrow and even move further at around 5,238, suggested the market picture chart sourced from Bloomberg. If global cues remained strong, the September futures could move up around 5,283. Volume-based support will be at 5,070-5,030.
The volume in initial balance (IB) range, the price range established by floor traders in the first two TPO time period of 30 minutes each, suggested short covering around 5,035-5,092. The trade summary matrix suggested buy-side trades in the Nifty September futures, but there was unwinding of around one million shares in (OI) post trading settlement despite OI build-up of 1.90 million shares intraday, indicating short covering from bears.
The day’s top gainers, Reliance Industries, Infosys, ICICI Bank and State Bank closed at around the day’s high on short covering in the IB range. The market picture chart hinted at fresh upside for Reliance around 892, Infosys around 2,477, ICICI Bank around 896 and State Bank around 2,089.
