A Doji pattern, indicating indecisiveness, in four trading sessions favoured the bears as Nifty futures fell more than 5.5 per cent over the last week’s intra-day peak of 6,094.
The uncertainty due to scams and the political situation at the Centre is likely to end around 5,640, suggest trading data in Nifty futures and options for the last two sessions.
The current selloff may end around 5,627.50 and that should be a good entry for a 175-point rally back into 5,800 and 5,900 thereafter, the intraday market picture chart from Bloomberg suggests.
Nifty futures today surrendered its 5,800-level support and closed at 5,780 on selling from liquidity providers. The trade summery matrix for the day suggests selling in the initial balance range (5,895-5,941) established by the first two time-price opportunities (TPO) time periods and change of hands in the value area (5,810-5,920) that makes up 70 per cent price points. Since the Nifty has closed below the lower end of the value area with 35 per cent volume and 20 per cent time-price opportunities, the fresh sell-off may take the Nifty below 5,700.
Nifty December futures settled at a 13-point premium to the spot and despite an increase in volume by six million shares, the open interest rose marginally by 365,000 shares.
The weak undercurrent is expected to stay for a day or two unless strong global markets and buying by domestic institutions revive the mood. The resistance remains above 6,000, but the significant rise in open interest in the 5,800-5,900-strike call options through sell trades and unwinding of short positions in the same strike puts is hinting at a near-term resistance range for the Nifty.
The significant unwinding of long positions in key stocks futures such as ICICI Bank, Reliance Industries, Tata Motors and Tata Steel during the last two hours indicate execution of stop-loss trades. The market picture chart suggests continued weakness in these stocks with Reliance expected to fall around Rs 944 and ICICI Bank around Rs 1,007. State Bank of India, which closed at Rs 2,706, is expected to move down further around Rs 2,580, the market picture chart suggests.
