Volume driven spike after firm opening of European markets and strong Dow Jones is likely to take the Nifty past 5,450 in a day or two. The volume in the Nifty futures and key stocks futures surged sharply in the last one and half hours accounting for almost 40-50 per cent of the total trades on short covering from top traders. The Nifty futures saw over 25 per cent trading volume from top buyers at an average price of 5,406 while price buyers created in 40 per cent volume at 5,365-5,380 levels.
The market picture chart show over 50 per cent trade changed hands at an average price of 5,408. Of the total volume above the 5,400 level, 25 per cent contracts were for lot size of 5,000 shares and above. This as per the price projection using volume can take the Nifty around 5,475 level. No wonder, the July futures closed at 17 points premium to spot and added 249,600 shares in open interest. The mid point level for the day was higher than the point of control areas, and hence price projection using TPOs is at 5,317.
Technically, the Nifty on the hourly chart is trading above its 20 hourly moving average at 5,347 and 40HMA at 5321, which are now its supports in the short run. According to Moses Harding, Head Global Markets Group IndusInd Bank, momentum is looking good for further gains tracking consolidation in global bourses. However, there is no confirmation of trend reversal and the current phase could only be a “correction process” before move lower to bring in strategic investors.
The options traders see strong Nifty with support at 5,365 from current 5,317. The 5,300-strike put now holds maximum open interest among puts indicating participant based support for bulls. The unwinding at the 5,200-5,400-strike calls suggest bears acceptance of bulls control over market. No wonder, the 5,500-strike call added 587,500 shares in open interest mostly through buy-side trades while the 5,400-5,500 strike put together added 55 per cent shares in open interest through sell-side trades.
Among stock futures, Reliance Industries may see strong surge above Rs 1,100. The stock closed above the top end of value as participant covered short positions in July futures above 1,080 levels. The TPO support for Reliance is at 1052 level. HDFC Bank achieved our volume based target and now poised for higher level at Rs 2,110 from the current close of 2,071. State Bank of India saw strong buying above 2,426 and hence poised to move up at around 2,460 level.
