The Nifty slipped below 5,300 and tested the lower-end support of 5,225 due to panic-selling in three index stocks of the Anil Ambani Group. The volume in the Nifty February futures rose sharply in the last two hours. The only positive signal was a 50-point recovery in the end on some short-covering at lower levels. The trading pattern in the Nifty February futures showed strong resistance above 5,300. Now, the break of 5,225 could lead to a fresh weakness into 5,180.
The trade summary matrix (TSM) indicates buy trades in the value area (5,268-5,328) and below the lower band of the value area. The February futures, however, saw strong selling pressure above 5,328. The Nifty February futures settled at a 10-point discount to the spot and added 388,950 shares in open interest (OI), mostly through sell trades at higher level, indicating a short build-up. TSM data show buy trades in the initial balance range (5,301-5,265), which indicates some short-covering by bears.
The market picture chart indicates TPO-based support for the Nifty February futures around 5,225 and volume-based buying around 5,201. The spot Nifty is expected to get support at 5,221 and volume-based buying may come around 5,177.
Put and call options data show unwinding of short positions in the 5,400-strike put options, but short covering in the 5,400-5,500-strike call options. The 5,300-strike call added 1.88 million shares in OI, while 5,300-strike put options saw a change of hands. It means there is a possibility of modest recovery above 5,300 in the near future. The significant put writing was seen in the 5,000-strike put options, which indicate lower-end support for the index if it loses support at 5,177.
Among stocks futures, Hindalco and BHEL closed on a weak note on profit-booking at higher level. The TPO data show a price level of Rs 217 and resistance at Rs 225 for the February futures of Hindalco. BHEL may decline to Rs 2,537 and face resistance at Rs 2,625, according to the volume picture chart.
