Most traders expected bounce-back from the Friday’s low of 5,680 to continue with both Nifty spot and futures achieving the upside targets indicated in this column yesterday. The spot Nifty closed at 5,960 while December futures settled at 5,979 on fresh long build-up and short-covering in key stock futures. From here, the market is expected to trade above the resistance zone and hence we may see profit-booking at the higher level.
The improved sentiment on the domestic front and strong gross domestic product growth provided the desired momentum to the market. Moses Harding, head, global markets group, IndusInd Bank, expects near-term consolidation within 5,750-5,950, with overshoot limited to 6,000. The market picture chart for the entire trading session is hinting at a time-price opportunities (TPOs)-based resistance around 5,992 (5,971 for the spot Nifty). The volume-driven surge is expected to end around 6,072.50, the market picture chart from Bloomberg suggests.
TPOs, the value area that makes up 70 per cent price points, is hinting at strong support at 5,902 in case the market reacts to the global pressure. The price movement and volume in Nifty futures suggest an index level of 6,025. Nifty December futures closed at a 18-point premium to the spot and added 800,000 shares in open interest, mostly though change of hands in the value area (5,910-5,970).
The initial balance range (5,875-5,920) saw 22 per cent volume, which indicated that early liquidity providers were not willing to sell at the lower level. The initial balance range is the first two TPO time periods and is principally established by floor and day traders. So, subdued volumes in the initial balance range from liquidity providers means the market is expecting a fresh rally in the Nifty.
The trading in call and put options suggests strong support for the Nifty above 5,900 while resistance is expected to be above 6,050. There was short-covering in the 5,900-6,000-strike call options and significant build-up of long positions in the 6,100-6,200-strike call options. Traders bought these calls to hedge short positions in the 6,000-strike call options. The 5,800-5,900-strike put saw a significant addition in open interest through sell trades, which indicated a support level for the Nifty.
