As expected, the market snapped its four-day slide on short-covering in key heavyweights. The Nifty is expected to move up further in the coming days with volume-based target of 5,900, the market picture chart from Bloomberg suggests.
In time-price opportunities (TPOs), the value area that made up 70 per cent of the price points is hinting at strong support at 5,757 in case of a fresh slide. The price and volume movement in Nifty futures after 12 noon suggests a level of 5,895 in the near future.
Nifty December futures closed at 14 points premium to the spot and added 304,750 million shares in open interest, mostly though buy volume in the initial balance range (5,800-5,835). The initial balance range is the first two TPO time periods and is principally established by floor traders and day traders. In the past two weeks, the Nifty saw either profit-booking or short build-up from liquidity providers. So, buy trades from liquidity providers means the market has accepted the trading range for the trading strategy going ahead.
Technically, on the lower side, 5,732 becomes a short-term support for the Nifty. Below that, it is 5,690. On the upside, 5,900 remains a crucial resistance and the Nifty will gain further strength only if it trades above that for some time.
The index continues to trade below its key daily and hourly averages, which is a concern for the bulls. Call options data suggest a level of 5,900 as participants bought the 5,900-strike call options on this expectation. The 6,000-strike call options hold the maximum open interest among call options, which is hinting at a resistance level.
There was poor trading volume in the 5,900-6,000-strike put options as traders expected a bounce-back in the near future. The significant addition in open interest was seen in the 5,600-5,700-strike put options, which are hinting at a strong support base for the index in the near future.
