The Nifty closed above 6,000 after testing the lower-end support of 5,970 on short-covering in index futures and stocks of the Anil Ambani group. Friday’s session suggests the bulls have overcome the resistance at 6,000 and are poised to take the markets above 6,060 this week.
The time-price opportunities (TPO) data signal a level of 6,060 for futures and 6,050 for the spot Nifty. The volume picture chart indicates the index has the potential to move to 6,100 before expiry of the December series. The market picture chart for the day’s trading session indicates support at 5,990.
We had indicated a range-bound trading in the Nifty, with strong support at 5,970 and resistance above 6,014. The Nifty moved up strongly above this resistance, with 55 per cent volume, mostly buy-side trades, from top operators. The Nifty December futures closed above the upper band of the value area (5,990-6,028), hinting at a strong undercurrent.
Trade summary matrix (TSM) indicates a change of hands in the value area and short-covering in the initial balance (IB) range (5,966-5,990). Traders booked profit above 6,028. No wonder open interest (OI) in December futures fell by almost two million shares over intraday positions, indicating short-covering from bears. The point-of-control (PoC), price level where the market spends most time trading, was below the lower band of the value area, which indicates strong support for the index at 5,990.
The Nifty January futures continue to command hefty premium over December, indicating long rollovers. The January series now carry an OI of 6.85 million shares, which is higher by 1.50 million shares compared to rollovers in December futures four days before expiry. The bears also expect market to strengthen and an expiry above 6,000. No wonder significant short-covering was seen in December contracts, much ahead of the expiry.
The trading volume in the Nifty put options signals that the support level has moved up from 5,990 to 6,000. The 6000-strike call options on Friday witnessed unwinding of short positions, while the same strike put options added an OI of 1.85 million shares. The 6,000-put options now carry the highest OI among put options, which indicates that expiry of the December series is likely to be above this level. The build-up of OI in call options, however, hints at a strong resistance above 6,100.
