The Nifty moved on expected lines and closed above the volume-based target of 6,155 indicated in this column on Friday. The rise in the index on Friday and also in all five trading sessions last week was without significantly high volume and poor rollovers. So the bears are out of the market, and hence the real strength of the bulls will get tested when the bears begin to build up short positions.
However, the bull run is expected to continue for some more time as the FIIs, a major derivative player, have not only allowed to expire short positions in December series but cut the short positions in index futures on the first day of the new series.
Going ahead, the market picture chart (MKTP) for the week ended December 31 is hinting at an index level of 6,220 and strong support at 6,045 in the case of a correction.
The Nifty maintained a bullish undercurrent by consolidating above 6,100 on the first day of the new series. The trade summary matrix (TSM) suggests buy-side trades in the value area and also in the initial balance range. The value area (6,145-6,170) saw narrow band movement, but significantly high, 75 per cent volume, mostly buy-side in that range.
The IB range (6,131-6,165) saw buy-side trade with 62 per cent volume and TPOs. The Point-of-Control (PoC), the price level where the market has spent the most time trading saw 27 volume at 6,160-6,165 is signs of market strength.
The trading pattern in the Nifty call and put options suggest consolidation around 6,100-6,200 and resistance above 6,300. Though the strong support is expected to come around 6,045, the open interest build-up in 6,100-strike put options suggest 6,100 will be the new support level going ahead.
The volume bar chart for the 6,100-strike call options shows 62 per cent volume above the average premium of Rs 134, mostly through a change of hands. This means the Nifty though has potential to go up around 6,234 going ahead, may see profit booking above 6,200. The 6,000 and 6,100-strike puts witnessed sell-side trades, which indicates a strong support area for the Nifty going ahead.
