Nifty futures look extremely strong on the weekly market picture chart, mostly on account of significant short-covering from bears and a long build-up from bulls. The time-price opportunities (TPOs) data for the five trading sessions last week indicate the Nifty has the potential to go up to 6,050 in the near future. The strong weekly volume above 5,850 in the Nifty futures suggests the index may not see any major correction next week.
However, a soft opening is expected on Monday as the Nifty September futures closed below 5,900 on Friday on the Singapore Exchange's Over The Counter facility. Derivatives data pertaining to foreign institutional investors (FIIs) indicate they had increased buy-side bets in index futures last week on expectations of a continuation of the rally. The FIIs' positions in stocks futures remains steady, despite significant higher trading volume, which suggest profit-booking in stocks futures.
On Friday, the Nifty futures at last made its much awaited bullish breakout to close above 5,900 on short-covering, but relatively poor volumes. Analysts at PINC Research say this breakout has opened the road to 6,250-6,300 levels in the medium term. The upward trend is strong and bulls have broken the resistance zones in the Sensex and Nifty to take the BSE's 30-share index to nearly 20,000 and the latter to around 6,000, IndusInd Bank Head (Global Markets Group) Moses Harding said.
The Nifty September futures closed at a premium of 22 points to spot on a relatively poor volume of 19.4 million shares, compared to 29.9 million shares on Thursday. The closing session of the trading volume in the Nifty futures should be made up mostly of buy-side trades. On the market picture chart, the futures show a modest upside at 5,924, based on TPOs, while volume-based data projects a level of 5,927. The intraday trading pattern hints at strong support around 5,860.
The weekly trading pattern in call options indicates a strong rally next week. The premium for 5,800-strike call is projected to go up to around Rs 230, while the premium for 5,900-strike call is expected to climb to around Rs 120. The 6,000-strike call is expected to get a premium of Rs 45. The 5,800-strike put hold has the highest OI among out-of-the money puts, while substantial OI build-up was seen in the 5,900-strike put.
Among stocks futures, RIL, Bharti Airtel, ICICI Bank, Infosys and Tata Steel look strong on the weekly market picture chart. Larsen & Toubro, SBI and Tata Motors are expected to be volatile.
RIL is expected to move to around Rs 1,055, while Bharti Airtel is likely to go up to Rs 370, based on price projections using both weekly TPOs and volume. Tata Steel is expected to move up to around Rs 618, while Infosys is likely to go up to around Rs 3,090.
