As expected, the Nifty opened on a weak note but moved up thereafter to settle at 5,141 following strong opening in the European markets. The key players on the index, Reliance Industries, Infosys, TCS, ICICI Bank and ITC lead the short covering rally above 5,100. Trading volume in the Nifty October futures remained sluggish as bears preferred to stay because the Nifty did not break below the crucial support at 5,050 and moved up convincingly to close around the day’s high.
The market profile suggested net buying in Friday’s session, as the Nifty closed above the upper band of value area (5,087-5,128) and had 76 per cent TPO counts above the point of control (PoC-5,095), multiple point of control (PoC) in the value area (5,084-5,122).
Based on strong consolidation in the value area (5,087-5,128) and volume-based buying from top traders at 5,128 would lead to strong opening on Monday, the market picture (MKTP) chart sourced from Bloomberg suggested. Price-based rally was seen around 5,163, while volume-based rise could take the Nifty October futures around 5,202, based on price projections using time-price counts and volume. The first support could come around 5,112, which is also the upper band of initial balance (IB) range (5,056-5,112). Major support is expected at 5,045.
The trading pattern of key index stocks in October futures suggested strong opening on Monday. The October futures of Reliance Industries gained 2.50 per cent as participants built long position of over 10 lakh shares on expectations of better than expected second quarter earnings. Based on the MKTP chart, the stock is expected to move up around 892 and get support at 842. Among other key stock futures, Infosys is likely to go up around 2,767, TCS around 1,179, ICICI Bank around 918 and ITC 208.
The fall in open interest (OI) in the 5,100-strike call options through buy-side trades suggested short-covering on the expectation of a fresh upside. The increase in OI in the 5,100 put (+1.41 million shares) and 5,200 put (+440,900 shares) through sell-side traders suggests strong opening on Monday.
