The Nifty has filled Tuesday’s technical gap, which is a major relief for bulls to maintain the 5,045 support level. The October futures traded at a premium to spot and settled at 5,150, up 106 points on account of short covering of 3.55 million shares, during the intra-day session. The futures, however, missed Monday’s high of 5,161, which was considered to be the most crucial level for the index to move above 5,200. The significant short covering in 5,200-strike call options in the morning session and fresh long build-up thereafter, hints at a strong rally and crossover of the 5,200 level tomorrow.
Nifty is being tossed up to the sell zone of 5,150-5,200 and a strong support at 5050-5000. There are no major triggers to guide extended gains over 5,200, while market has taken all negative cues into account. While global cues set up consolidation mode at this stage; RBI’s rate action and its stance on the way forward could generate a bit of volatility, says Moses Harding, head, global markets group, IndusInd Bank. A pause mode could trigger test/break of 5,200 into 5,350 and rate hike would lead to test of 4850. So there is revision in the near term range into 4,850-5,350 from the earlier 4,700-5,200.
The market profile suggested strong consolidation in the October futures, around 5,070-5,100 and initiative buying range extension above 5,100. The trade summary matrix data hinted at short covering from floor traders and buying from other time-frame traders. The futures faced some profit taking above 5,146, but the trading volume was significantly low around 12.8 per cent. The October futures closed at a 10-point premium to spot and shed 1.19 million shares in open interest through buy-side trades, suggesting short covering from bears. Market sentiment turned positive, as October futures closed above Tuesday’s gap.
The market picture chart (mktp) indicated support at 5,093 and resistance around 5,190. The rally from Tuesday’s low of 5,013 to Wednesday’s high of 5,157 could take the Nifty around 5,235. The rally above 5,200 is expected to be driven by the day’s top contributors to the index. The October futures of Reliance Industries is expected to move up around 859, ICICI will move up to around 933, Larsen & Toubro could move up at 1,423, HDFC Bank to 505 and ITC around 211, the MKTP chart suggested.
