The Nifty September futures staged a smart recovery from the day’s low of 4,756 to close at 4,840 on strong opening in European markets. We had indicated in this column last week that September futures would maintain support at 4,800 with downside risk at around 4,759. The market undercurrent after Monday’s pullback has changed a bit in favour of the bulls and will now try to crack the 4,900 mark tomorrow if global markets close in the green. Weak global markets could lead to a significant fall to around 4,800, the market picture chart suggested.
The market is trading for the expiry of the September series in three days. So the recovery in the Nifty may not go beyond 4,930, but the open interest (OI) build-up at 4,800-strike call and put options indicated strong support for the futures around 4,800. Trading in 4,900-strike put options seems to be favouring the bulls as the trade summary matrix (TSM) data in 4,900-strike put showed sell-side bias, indicating short build-up by derivative participants. TSM data for the September futures suggested consolidation in the initial balance (IB) range of 4,813-4,860.
There are no clear recovery signals as other time-frame traders were net sellers at 4,850. However, a 27 per cent TPO count above the Point of Control (PoC-4,842) indicated a net buying day and initiative buying.
The market picture chart (MKTP) hinted at price-based rally around 4,927 and support below 4,805. The futures settled at a 9-point premium to spot, and saw an unwinding of long short positions of 2.05 million shares during the after trade settlement period. The October futures which closed at 10 points premium to September futures added 2.33 million shares in OI, indicating long build-up.
Short-covering was evident in the 4,900-strike call options and profit booking in the same strike put options. Participants built up fresh short at 5,000-strike call and covered their short positions in the same strike put. The day’s top losers, Reliance Industries and ITC, are expected to see fresh correction. Reliance is expected to move down to 738, with an upside resistance at 771. ITC may fall around 185, with an upside resistance around 193.
