The market closed sharply lower with the Nifty losing its support of 5,900 to close at 5,866 after reports of raids by the CBI on a housing finance company. The Nifty had closed below 6,000 on Tuesday on artillery exchange between North and South Korea. So, both global and domestic cues have combined to push the bulls into the pavilion while the bears are celebrating the weakness with rolling over short positions.
Going ahead, the sell-off in the last 75 minutes with a significant volume (36.4 per cent) can take the Nifty below 5,800 at around 5,775, the market picture chart (MKTP) sourced from Bloomberg suggests. The intra-day time-price opportunities (TPOs) which display the market price within 30-minute time periods is hinting at strong resistance for the Nifty above 5,975. The volume picture that displays trading volume at each price increment indicates support at 5,775.
The near-term bearish signals are expected to continue for some more time with the Nifty gradually moving down around 5,700 in the near future. The significant unwinding of long positions in the November series before expiry and the higher rollover in the December futures (20.1 million shares) despite a sharp correction in the last couple of days indicates a fresh sell-off going ahead.
The liquidity providers continue to be net sellers in the initial balance range (the first two TPO time period), which indicates greater uncertainty in the market. The value area where approximately 70 per cent trading volume and TPOs get executed is hinting at a change of hands. This means the market is not accepting a price range in the value area, which is in the control of short-term liquidity providers.
A significant addition of OI was seen in 6,000 strike call options of the November series, despite a day deadline for expiry. The OI build-up at these calls is hinting at resistance for the Nifty. The participants seemed to have covered short positions in 5,900-6,000-strike puts to protect fresh erosion. However, fresh put writing was seen in 5,800 strike put options on the expectation of strong support for the Nifty at that level.
Going by the build-up of open interest in the put and call options, the Nifty expiry is expected to be above 5,800.
