'Next upmove likely to be explosive'

As expected, the Nifty rebounded on the back of strong global markets, which gained after global leaders approved a three-year bailout for Greece on Sunday. We had predicated the bounce-back in this column in our Friday edition.

The next upmove is likely to be explosive and should take the Sensex to 19,000 and the Nifty to around 5,550, says Gautam Shah of JM Financial. The Chinese market has tested the downside target of 2,660 while the Dow Jones has completed the much-required correction, making the global set-up comfortable.

Nifty May futures closed at a premium to the spot for the first time in this series and shed over five million shares in open interest (OI) from intra-day levels, mostly through short-covering by big players. Bloomberg data suggested traders initiated shorts when the Nifty started trading convincingly above 5,160. The market is expected to have bottomed out now as the mathematical mid-point of the day (high + low/2) was above the most time-price opportunity area, indicated as point of control.

Nifty May futures, however, closed above the upper band of value areas (5,100-5,180) on poor volume, indicating resistance at higher levels. According to the market picture chart, the support for the Nifty using TPO and volume charts is around 5,000. Strong build-up of open interest in the 5,100-strike put suggests the Nifty may not go below 5,100. Participants built short positions in the 5,200-strike put (open interest up 0.8 million shares) on expectation of a strong rally above 5,200. The resistance is expected to be above 5,300.

Reliance Industries (RIL) met the TPO target mentioned in the Sunday edition. The company’s May futures gained 5.3 per cent to Rs 1,080 on short-covering.

However, the price projection using TPO and volume suggests limited upside. ICICI Bank rose 5 per cent to close above value areas on strong volume. The May futures is expected to move up around Rs 951, according to the TPO price projection.