A non-trend day was followed by a strong up move after consolidation around 5,460-5,480. The Nifty all the same faced strong resistance above 5,520 and settled near crucial resistance level of 5,480 on profit booking. We had indicated a non-trend day and is often a precursor to a new vertical move, but due to the expiry of May series just five days away, any upside above 5,480 will not sustain. The trade summary matrix, or data, on indicative buy-sell bids by traders hints at buy-side trades indicating short covering.
The Nifty May futures closed at a 4-point discount to spot and unwinding of 892,400 shares in open interest (OI) through buy-side trades, indicating short covering from bears at the lower level. However, the May futures closed at 5,480 which was also the area of point of control (PoC). The PoC represents the most traded price, which tends to imply the market will return to this price quite often. Nevertheless, the initial balance (IB) range established by the floor traders in the first two time price opportunities (TPO) hint at a resistance above 5,490.
The market saw buying range extension as the Nifty rallies above IB range (5,428-5,490) at 5,522. Importantly, the buying range extension occurred above Friday’s value area and hence it was initiating buying range extension. It is a strong buy signal. The market picture chart hints at an immediate support at 5,445 and price-based rally around 5,530-5,535.
The volume-based upsurge hints at an index level of 5,580. The Bank Nifty May futures may face resistance above 10,850 and volume-based support is seen below 10,600. The May futures of Larsen & Toubro achieved our target (1,667) and closed marginally below that level at 1,655.
The moved in a narrow band and closed within value area and saw unwinding of 537,375 shares in OI indicating profit booking. The market profile classification suggests a non-trend day in L&T as there was 100 per cent volume in IB range indicating more day trader than other time-frame trader.
The stock is expected to get support at 1,490 with an upside price target of 1,850.
