The market lacked steam and moved in a tight range on Friday as the participants preferred to sit on the fence ahead of the monetary policy on the 25th and the derivative expiry on the 27th. Nevertheless, the bear grip on the stock market has loosened a bit with the Nifty testing the support set up at 5,700-5,680, but failed to cross the 5,720 resistance. The close above the resistance level is more crucial for the bulls to take the Nifty around 5,830. However, only three trading days are left for the derivative expiry, so we may not see range-bound trading.
The market picture chart suggests that the Nifty futures may see a volume-based upside around 5,721-5,735 and get TPO support at 5,660. The spot Nifty is expected to face strong volume and TPO-based resistance at 5,745. The volume and the TPO accounted for around 80-82 per cent of the day’s trades in the range of 5,688-5716, which is hinting at the support zone for the Nifty. The TPO and volume-based upside for the February futures is seen at 5,768 while support is expected at 5,705.
On a weekly market picture chart, the Nifty is expected to get strong support in the range of 5660-5,716 and resistance above 5,722. The weekly chart shows buying in the initial balance range from floor traders and day traders. The change of hands among value buyers was seen in the value area (5,660-5,722). The weekly chart suggests that the index may not go below 5,660. The Nifty is expected to expire around 5,690-5,716 as the point of control (PoC), the price level (5,692-5,704) where the market has spent the most time trading, saw buy-side trades from top traders last week.
The traders covered short positions in the 5,700-5,800-strike call options and sold the 5,600-strike put options on expectation that the index may get strong support at that level. The 5,900-strike call saw a change of hands short covering as the participants thought it was prudent to cover short if the market rallied sharply after the monetary policy. The build-up of open interest in the Nifty calls and puts indicates selling pressure above 5,700 and support below 5,600.
