Support for Nifty may move above 5,400

As expected, the Nifty opened on a positive note and moved in a narrow range on uninspired trading volume at higher levels. A market picture chart shows more sell-side trades in the Nifty August futures above the upper band of the value area (5408-5428), as participants preferred to book profits at higher levels.

The August futures did manage to close at a premium to spot, but the gap was reduced from a high of 10 points to just three points at close. The Nifty futures added 1.16 million shares in open interest (OI) — mostly a blend of short and long positions.

 

The point of control (PoC), which identifies the price level where the market has spent the most time trading, witnessed a distribution of time-priced opportunity (TPO) and volume in the value areas. This means participants are finding it difficult to establish important levels for a trading strategy. A price projection using TPOs and volume suggests the Nifty may find strong resistance above 5,450. Tom DeMark (TD) price projections, on the basis of the day’s trading range, suggest a high of 5,479 and a low of 5,391.

The 5,300-strike call saw short-covering as participants expect the Nifty not to fall below 5,300 in the near future. The 5,400- and 5,500-strike calls together added a million shares in OI through a blend of long and short positions, according to Bloomberg data. The build-up of OI in call options suggests the Nifty may see profit-booking between 5,400 and 5,500. The support for the Nifty is expected to move above the 5,400-level as this strike put has added 1.17 million shares in OI.

Among stocks futures, ICICI Bank, as projected, achieved the TPO target on the back of strong buy-side trades and a long build-up in the August futures.

The TPO and volume data project an upside of Rs 935-943, while the TD range indicates a high of Rs 956 and a low of Rs 925. State Bank of India, too, achieved the TPO target on a long build-up. The August futures of the bank are expected to move around the Rs 2,588-mark, based on TPO projections. The TD range’s high for Tuesday is at Rs 2,637.