The Nifty October futures failed to move above the resistance zone of 5,150-5,160 for the fourth time in the last seven trading sessions, and closed near the day’s low, as other timeframe traders turned sellers. The November futures closed (5,127) in a Doji pattern (opening price is the same or very near to the closing price), indicating an equilibrium in buying and selling. The Doji, however, had a long upper shadow, indicating presence of buyers at the initial stage, but subsequent price move attracted sellers.
The market is currently trapped between sell zone (above 5,150) and buy zone (5,050-5,080), and hence it requires a strong breakout to move out of this zone. According to Moses Harding- Head Global Markets Group, IndusInd Bank, the strong bearish set up in the domestic market would now call for test/break of 5,000 for quick run into 4,850. It is also possible that RBI’s signals of extension of hawkish stance into the short term can add to downward pressure for extension to 4,700.
The October series will expire tomorrow, as the market remains closed on Wednesday on account of muhurat trading and on Thursday for Diwali. So the expiry level of the November series is largely depending on rollovers into next series. The open interest (OI) positions in 5,100-strike call and put options indicate the expiry could be below 5,100. The OI in 5,000-strike put options at 5.99 million shares suggested strong support for the Nifty at 5,000.
Nevertheless, the volume-based selling in the last two hours from around 5,140 to the day’s low of 5,092 could take the October futures around 5,077, the market picture (MKTP) chart suggested. The November futures which closed at 25 points premium is expected to get support at 5,097. The upside resistance is expected at 5,157-5,177. The domestic market is significantly glued to the global markets, so any significant upside/downside could upset the above mentioned trend.
Among key contributors to the index, Infosys closed on a strong note while Reliance Industries witnessed selling pressure at higher level from other time-frame traders and closed around day’s low. The MKTP chart is hinting at price level of around 2,809 for Infosys while Reliance which closed near day’s low could face resistance above 861.