The Nifty crossed the first hurdle and closed at 6,000, the immediate resistance level for the bulls. But the 6,000 close was not backed by volume in the December futures, which fell by 5.30 million shares. The good news for the bulls was that 100 per cent trades in Nifty futures were above 5,970, the most crucial level to break the market away from the range it has been trading in for quite some time.
However, as expected, the Nifty moved in a 25-30 points range in the value area and the initial balance range established by liquidity providers.
The trade summary matrix from Bloomberg suggests buy-side trades in the value area (5,990-6,015) and the initial balance range (5,971-6,006), which hints at short-covering by floor traders. The value area represents 70 per cent volume and time-price opportunities (TPOs) while the initial balance range is the first two TPO time periods of 30 minutes each. Since the initial balance range is established by floor and day traders, it establishes important levels that should be considered in a day trading strategy. The value area suggests acceptance or rejection of price levels by short-term liquidity providers.
The domestic cues are bullish — higher advance tax payments indicate strong third-quarter numbers. The stimulus in the western economies should keep global bourses in the consolidation mode. Overall, the Nifty continues to stay tuned to a near-term consolidation within 5,850-6,150 with short-term target of 6,300 ahead of the January monetary policy, says J. Moses Harding, head, Global Markets Group, IndusInd Bank. The trading in Nifty call and put options suggests the market may not dip below 5,970 immediately while the 6,100 crossover is possible if the Nifty closes above 6,060.
The December futures, which closed at a five-point premium to the spot, added 402,450 shares in open interest despite an intra-day build-up of 2.34 million shares. The TPOs signal an index level of 6,042 for futures and 6,037 for spot Nifty. The volume picture chart is hinting at 6,055 and 6,047 for futures and spot Nifty, respectively. The market picture chart for the day’s trading session indicates support at 5,970. There was significant unwinding in the 5,800-5,900-strike call options and fresh build-up of open interest in these put options. The participants also covered short positions in 6,000 call options and built shorts in the same strike put options.
Among stock futures, Reliance Industries is poised to gain further with a price target of 1,088. The December futures saw 41 per cent volume above Rs 1,070 and only 10 per cent below Rs 1,063. The support for RIL is expected at Rs 1,057.
