The Nifty failed to break the 6,000 resistance and closed in a Doji pattern on lack of buying by liquidity providers and day traders in the value area. The index could not close above the last week’s high of 5,970, which was the most crucial level for a fresh rally to the short-term target of 6,060. Going ahead, the trading data in Nifty December futures are hinting at a movement between the immediate support of 5,850 and resistance at 6,000.
The data in Nifty December futures outline change of hands above 5,950 and short-covering below 5,930. December futures, which closed at a 12-point premium to the spot, added 848,750 shares in open interest, which indicates that new buy positions were created at the lower level by new entrants. The point-of-control, which identifies the price level where the market has spent the most time trading, saw multiple distributions in the value area (5,926-5,980). This means lack of clarity among day traders.
Put option participants covered short positions in the 5,600-5,600-strike put on expectation of a narrow-band movement. There was significant addition of open interest in the 5,900-strike call as well as put options while the 5,800-strike put continued to hold the highest open interest among all put options, This signals that major support continues at 5,800 while a few bulls expect the Nifty may not go below 5,900 in the near future Nevertheless, major resistance remains above 6,000, the open interest suggests.
Overall, short- and medium-term fundamentals for the market look good and hence there is no need to get bearish at this stage. The trading range for the Nifty in the December series is likely to be between 5,850 and 6,020. A bearish stance can be taken only if the index loses its support of 5,800 on a closing basis.
The Nifty is expected to move in a narrow band tomorrow based on price projection using time-price opportunities (TPOs). The TPO projection is hinting at resistance for the index at 6,000, which was also the day’s high value. The volume picture chart for the last 40 minutes suggests support at 5,930.
