As expected, the Nifty moved between 5,580 (resistance) and 5,480 (support) as the bulls preferred for a strong consolidation around the current levels. The bears welcomed the bulls approach and covered short positions in the index futures and key stocks futures when the Nifty was trading below 5,504. The Nifty closed in a Doji pattern in the end, not for uncertainty, but mostly a pause before significant bull’s rally. The Nifty March futures closed at a premium to spot, fresh long positions of around one million shares.
The trade summary matrix (TSM), which indicates buy-sell positions of traders, saw change of hands in initial balance range (the first two time price opportunities, or TPO) and sell-side bias in value area above 5,530. The options traders covered short positions in the 5,300-5,500-strike call options and built-up fresh long positions in the 5,600-strike call options. The trading volume and open interest (OI) has increased in the deep out of the money calls (5,700-5,800) mostly to hedge the short positions.
The Nifty March futures is likely to face resistance at 5,580-5,591, the TPO and volume picture chart suggests. The spot Nifty is expected to face resistance at 5,562-5,580 and most crucial support at around 5,480. The initial balance range (5,530-5,570), established by floor traders, saw 54 per cent volume and TPO, down from 92 per cent on Tuesday, indicating strong resistance area for the bulls. The value area (5,504-5,552) saw buy-side trades and 72 per cent volume as well as TPOs, and hence, the Nifty is expected to get strong support at those levels.
Among other stock futures, Reliance Industries (RIL) and Reliance Communication (RCom) are expected to move up a fresh on short-covering and long build-up. The RIL closed at 1,000 with strong volume above 990. The price and volume-based upsurge is expected to the RIL around 1,030. RCom added 372 per cent in open interest, mostly through buy-side trades indicating long build-up. The stock is expected to move up around 109.
The Bank Nifty is expected to move in a narrow band with a volume-based resistance at 11,115 and TPO-based support at 10,825. State Bank of India may get support at 2,605 and face resistance at 2,651. ICICI Bank is likely to get support at 1,015 and may see volume-based upside at around 1,050.
