As expected, the Nifty consolidated for the second consecutive day, faced resistance above 6,060 and ended a Doji pattern, which indicates some correction to allow the bears to cover their short positions. The Nifty December futures settled at an eight-point premium to the spot and shed one million shares in open interest intraday, indicating short-covering by bears. Going forward, an intraday sell-off in index futures from the day’s high of 6,094 to a low of 5,988 is expected to take the Nifty around 5,930, the volume picture chart suggests.
It remains to be seen whether it was a pullback or start of a fresh rise. The intraday volume picture chart shows buy trades in the value area as well as in the initial balance range. The market picture chart is hinting at resistance for Nifty futures above 6,070. In case the resistance is crossed, the index may face resistance at 6,142-52. The volume-based resistance is expected to be around 6,112-6,162. The spot Nifty is expected to face resistance around 6,030 and around 6,118-22 thereafter.
The only hold-up for an upmove is the volume-driven sell-off in the last 75 minutes. The futures closed below the lower end of the value area (6,025-6,080) with 23 per cent volume and 16 per cent time-price opportunities time period. However, the trade summery (TSM) matrix, which indicates buy-sell volumes, shows buy trades for 75 minutes. This indicates short-covering and some profit-booking. However, this volume-based decline can take the Nifty to around 5,930, the volume picture chart indicates.
The trading volume in Nifty call options is hinting at short-covering in the 5,900-strike calls and fresh build-up of open interest in the 6,000-6,300-strike call options. The TSM chart indicates buy trade in the 6,100-6,200 call options and change of hands in the 6,000 call options. There were sell trades in the 6,300-6,400-strike call options.
Participant built fresh short positions in the 6,000-6,100-strike put options on expectation of a fresh upside in the Nifty above 6,100.
